NEVADA  APPLIED  HISTORY  SERIES 
Edited  by 

JEANNE  ELIZABETH  WIER 


TAXATION  IN  NEVADA 

A  History 


By 


ROMANZO  ADAMS 

Professor  of  Economics  in  the  University  of  Nevada 


Published  at  Reno,  Nevada,  in  1918,  by  the 
Nevada  Historical  Society 


CARSON  CITY 

STATE  PRINTING  OFFICE     .     .     JOE  FARNSWORTH,  SUPT. 
1018 


EDITOR'S  INTRODUCTION 

The  motto  of  the  Nevada  Historical  Society,  "Servare 
et  Conservare" — "To  serve  and  to  preserve" — indicates 
that  the  functions  of  this  organization  are  not  merely 
to  gather  together  the  documents  and  the  relics  of  the 
past,  but  to  create  a  workshop  for  students  who  may 
seek  to  organize  and  interpret  the  facts  of  history  in  the 
interest  of  present  and  future  progress.  Some  such 
studies  have  been  made  hitherto  through  the  use  of  the 
historical  archives  of  the  Society  and  have  been  pub- 
lished in  our  Reports  and  Papers.  As  this  institution 
is  enabled  by  increasing  appropriations  to  gather  under 
its  roof  a  more  complete  stock  of  materials  such  research 
work  will  be  more  effectively  prosecuted.  Comparatively 
few  scholars  possess  the  time  or  patience  to  run  down 
for  a  brief  monograph  source  material  so  far  afield  and 
so  difficult  to  collect  as  is  that  pertaining  to  Nevada. 

The  following  excerpt  is  from  Benj.  F.  Shambaugh's 
introduction  to  Brindley's  History  of  Taxation  in  Iowa. 
With  a  few  words  changed,  it  would  apply  equally  well 
in  relation  to  the  work  of  Dr.  Adams's  Taxation  in 
Nevada: 

The  writing  of  a  history  of  taxation  in  Iowa  is  not 
an  easy  task ;  indeed,  it  involves  many  difficult  prob- 
lems both  of  research  and  of  presentation.  From 
beginning  to  end  the"  scientific  investigator  is  really 
embarrassed  by  a  superabundance  of  materials.  The 
statute  books  of  the  Territory  and  State,  the  journals 
of  the  Legislature,  the  messages  of  Governors,  the 
reports  of  Auditors  and  Treasurers,  the  reports  of 


vi  /•;/>/ Y'O/f'N  INTRODUCTION 

special  commissions,  the  decisions  of  courts,  the 
linancial  reports  of  counties,  special  and  miscellane- 
ous public  documents,  and  tons  of  newspapers  yield  a 
richness  of  data  that  is  inviting  and  at  the  same  time 
appalling.  The  facts  and  statistics  of  industrial  and 
economic  developments,  covering  nearly  three  quar- 
ters of  a  century,  are  equally  abundant  and  far  more 
difficult  to  obtain.  The  problems  of  handling  such 
masses  of  detailed  information  fully,  accurately,  and 
without  confusion  can  only  be  appreciated  by  those 
who  have  successfully  carried  to  completion  similar 
investigations. 

But  the  problems  of  historical  research  are  not  the 
only  difficulties  which  confront  the  writer  of  such  a 
history  of  taxation  as  has  been  produced  by  Profes- 
sor Brindley.  Underlying  the  statute  and  the  code 
provisions,  the  reports  of  public  officials,  the  deci- 
sions of  the  courts,  and  the  facts  of  industrial  life, 
are  fundamental  economic  principles  and  theories 
which  must  not  only  be  seen  and  appreciated  by 
the  investigator,  but  by  him  successfully  handled 
as  scientific  interpretations  of  the  facts  of  history. 
And  of  no  less  importance  are  the  problems  of  i>oli- 
tics  and  administration  involved  in  the  actual  work- 
ings of  the  machinery  of  assessment,  equalization, 
and  collection. 

Moreover,  the  opportunity  for  utilizing  and  mak- 
ing practical  application  of  the  results  of  historical 
research  are  perhaps  nowhere  more  promising  than 
in  the  field  of  fiscal  legislation  and  administration. 
Nowhere,  indeed,  are  there  today  greater  opportuni- 
ties for  the  science  of  Applied  History  than  in  the 
solution  of  the  complex  problems  of  tax  reform.  At 
the  same  time  there  is  no  line  of  reform  that  is  more 
difficult  and  perplexing,  since  from  the  very  nature 
of  the  problems  involved  the  whole  subject  is  one 
which  is  too  often  handled  with  prejudice,  or  parti- 
zanship.  or  from  the  standpoint  of  selfish  interest. 


EDITOR'S  INTRODUCTION  vii 

Through  the  clear  and  impartial  interpretation  of  the 
financial  facts  of  Nevada  history  Dr.  Adams  has  made 
an  important  contribution  to  the  historical  literature  of 
this  State.  It  is  now  possible  for  the  busy  man  or 
woman  easily  to  become  informed  concerning  our  system 
of  taxation  and  the  manner  in  which  it  has  been  evolved. 
In  a  democracy  .such  knowledge  widely  disseminated 
serves  as  the  sure  basis  of  progress. 


AUTHOR'S  PREFACE 


The  history  of  taxation  in  Nevada  possesses  both  a 
practical  and  a  theoretical  interest.  It  has  an  important 
practical  significance  because  it  furnishes  suggestions 
relative  to  reforms  designed  to  adjust  the  system  of 
taxation  to  the  special  circumstances  prevailing  in  this 
State.  To  the  student  of  public  finance  the  experience 
of  Nevada  possesses  features  of  unique  interest  because 
of  the  special  physical,  economic,  and  political  condi- 
tions. In  the  language  of  the  logician,  Nevada  presents 
some  important  variations  in  the  circumstance. 

Admitted  to  statehood  in  1864  on  account  of  a  national 
political  exigency1  when  it  had  a  population  of  only 
about  fifty  thousand  people,  and  when  it  had  no  stable 
industry,  Nevada  has  had  an  experience  unlike  that  of 
other  American  States.  During  the  early  period  of 
statehood  the  dominant  industry  was  gold  and  silver 
mining.  Indeed,  there  was  no  other  basic  industry  at 
all,  the  scanty  agriculture  being  directly  dependent  on 
the  market  of  the  mining  camp  for  its  existence.  In 
later  years  there  was  a  rise  in  the  stock-raising  interests 
and  a  decline  in  mining,  while  more  recently  there  has 
been  a  more  diversified  and  better  balanced  economic 
development  with  mining  and  stock  raising  the  important 
industries. 

The   sparse   population   of  the   State  has  fluctuated 

'One  more  antislavery  State  was  needed  to  carry  the  Thirteenth  Amend- 
ment to  the  National  Constitution,  and  Nevada  was,  through  the  influence 
of  Abraham  Lincoln,  admitted  to  the  Union  in  order  to  supply  this  vote. 


X  AUTHOR'S  PREFACE 

largely  with  the  mining  movement,  and,  after  reaching 
an  estimated  early  maximum  of  about  seventy  thousand 
in  1877,  it  declined  to  but  little  over  half  that  number 
in  1900,  and  then  more  than  doubled  in  the  next  seven 
years,  after  which  there  was  a  small  loss.  This  small 
population  has  maintained  all  of  the  machinery  of  state 
and  local  government,  and  consequently  the  per  capita 
tax  is  very  high  and  would  be  burdensome  were  it  not 
for  the  fact  that  Nevada  leads  all  the  States  by  a  wide 
margin  in  per  capita  wealth.1 

The  main  plot  of  the  story  of  taxation  in  Nevada 
grows  out  of  the  fact  that  the  traditional  system  of  taxa- 
tion brought  from  the  Eastern  States  was  a  misfit  under 
the  special  economic  and  political  conditions  which  pre- 
vail in  this  State.  The  early  settlers — if  men  who  moved 
about  so  constantly  can  be  called  settlers — were  familiar 
with  the  methods  of  taxation  that  had  become  traditional 
in  the  eastern  half  of  the  country  by  the  middle  of  the 
last  century,  and  the  makers  of  the  state  constitution 
appeared  to  regard  the  general  property  tax,  excepting 
as  applied  to  the  mines,  as  right  beyond  question  and 
without  reference  to  conditions.  The  constitution 
exempted  mines  from  taxation,  taxing  the  proceeds  only ; 
but  with  this  exception,  and  with  the  exception  of  certain 
classes  of  property  devoted  to  public  uses,  all  property, 
real  and  personal,  was  made  taxable  at  a  uniform  rate, 
and  provision  was  made  for  uniform  assessments. 

'Per  capita  estimated  true  value  of  all  property  in  the  United  States  and 
in  each  of  the  five  States  having  the  highest  per  capita  true  value  for  1912 
(Wealth,  Debt,  and  Taxation,  vol.  1.  p.  26)  : 

United  States $1.966       North  Dakota $3,874 

Nevada $5,038        California $3,284 

Iowa $3.539        Nebraska. $3,110 


AUTHOR'S  PREFACE  xi 

There  have  been  more  or  less  constant  efforts  on  the 
part  of  the  people,  through  evasion,  litigation,  and  legis- 
lation, to  escape  from  the  natural  outcome  of  the  misfit 
imposed  by  the  constitution,  and  to  adjust  the  system  to 
the  special  needs  of  the  State.  These  efforts  have  met 
with  a  measure  of  success,  but  more  direct  and  more  fun- 
damental improvements  await  a  change  in  the  organic 
law  of  the  State — a  change  placing  greater  power  and 
responsibility  in  the  hands  of  the  Legislature. 

It  is  not  the  purpose  of  a  work  primarily  historical  to 
undertake  the  propaganda  of  any  system  of  taxation. 
Nevertheless  the  present  work  has  some  connection  with 
the  very  general  movement  in  the  United  States  in  the 
direction  of  tax  revision.  No  true  history  of  taxation 
can  fail  to  point  out  the  practical  working  effects  of  the 
system  described,  nor  can  it  omit  a  definition  of  the 
problems  which  have  arisen  in  connection  with  its 
administration.  Any  wise  revision  of  the  system  of  tax- 
ation must  be  based  on  experience  interpreted  in  the 
light  of  principles.  History  thus  contributes  toward 
conservative  progress. 

All  efforts  directed  toward  a  reorganization  of  our 
system  of  taxation  should  recognize  the  principles  of 
historic  continuity.  The  State,  now  more  than  half  a 
century  old,  does  not  stand  at  the  beginning.  Business 
interests  are  more  or  less  adjusted  to  the  existing  system 
and  the  owners  of  various  sorts  of  property  have  rights 
which  should  not  be  violated  by  a  vacillating  policy  or 
by  unnecessarily  radical  or  rapid  changes.  Nevertheless 
the  right  of  the  State,  after  careful  deliberation  and 
adequate  knowledge,  to  introduce  such  reforms  as  may 


xii  AUTHOR'S  PREFACE 

be  demanded  by  the  special  circumstances  must  always 
be  recognized. 

For  more  than  six  years  the  writer  has  devoted  to  this 
study  such  time  as  his  other  duties  have  permitted. 
Since  this  period  has  been  one  of  considerable  progress,  it 
has  been  his  privilege  to  revise  many  paragraphs,  sub- 
stituting for  the  original  arguments  in  behalf  of  certain 
reforms  a  treatment  of  such  reforms  as  accomplished 
facts.  It  has  been  his  privilege  also  to  be  in  pretty  close 
touch  with  the  leaders  in  the  progress  of  this  period.  In 
1912-1913  he  served  on  the  Citizen's  Committee  on 
Economy  and  Taxation  and  thus  participated  in  the 
deliberations  that  led  to  the  creation  of  the  Nevada  Tax 
Commission.  Through  frequent  conversations  with  the 
members  of  the  Tax  Commission  he  has  been  able  to  fol- 
low pretty  closely  the  main  steps  through  which  taxing 
procedure  has  been  modified  by  this  central  adminis- 
trative agency. 

In  the  preparation  of  a  monograph  of  this  character, 
the  problem  is  what  to  leave  out.  The  writer  is  tempted 
to  include  much  material  which  interests  him,  but  which 
has  no  great  value  for  the  ordinary  reader.  After  one 
has  devoted  many  hours  to  a  statistical  study  to  estab- 
lish the  validity  of  some  general  proposition,  he  is  dis- 
posed to  present  all  his  evidence.  However  valuable  such 
material  may  be  to  a  few  special  students  and  investi- 
gators, it  tends  to  obstruct  the  progress  of  the  ordinary 
reader.  The  writer  wishes  chiefly  to  reach  the  intelli- 
gent citizens  of  the  State  who  are  interested  in  taxation 
and,  to  this  end,  he  has  brought  the  more  valuable 
material  within  the  compass  of  a  small  volume.  Most 


AUTHOR'S  PREFACE  xiii 

statistical  tables  have  been  omitted.  Aspects  of  taxation 
of  considerable  general  importance,  but  of  little  special 
significance  to  Nevada,  have  not  been  considered.  While 
the  facts  of  experience  are  interpreted  from  the  stand- 
point of  general  principles,  there  is  no  systematic  exposi- 
tion of  these  principles.  Matters  of  small  importance  are 
given  small  space.  Emphasis  has  been  placed  on  those 
things  in  which  the  experience  of  Nevada  has  been  some- 
what unique,  and  on  matters  of  practical  importance 
from  the  standpoint  of  tax  reform. 

The  subject  of  taxation  is  not  necessarily  so  abstract 
and  technical  that  it  is  devoid  of  interest  to  the  ordinary 
citizen.  It  has  its  human  interest.  This  monograph  is 
written,  not  primarily  for  the  specialist,  but  for  the 
citizen,  and  the  writer  has  tried  to  attain  a  style  that 
will  not  detract  from  such  interest  as  may  inhere  in  the 
subject. 

The  author  would  acknowledge  his  obligation  for  aid 
to  numerous  public  officers,  and  particularly  to  the  able 
men  who  have  served  on  the  Tax  Commission  during  the 
four  years  of  its  existence,  to  Professor  A.  E.  Hill  who 
has  read -the  manuscript,  and  to  Professor  Jeanne  E. 
Wier,  Secretary  of  the  State  Historical  Society. 

ROMANZO  ADAMS. 
UNIVERSITY  OF  NEVADA, 
September  15,  1917. 


CONTENTS 


CHAPTER  I  PACE 

ECONOMIC  CONDITIONS I 

Relation  of  taxation  to  the  economic  situation.  Economic 
characteristics  of  Nevada.  Physical  conditions.  Agricul- 
ture and  stock  raising — statistics  of  growth.  Mining. 
Statistics  of  mining  production.  Characteristics  of  the 
mining  industry  and  of  a  typical  mining  camp.  Impor- 
tance of  transportation.  The  Central  Pacific  Railroad. 
Growth  of  State  in  stability. 

CHAPTER  II 
TAXATION  IN  THE  CONSTITUTION 10 

Two  constitutional  conventions.  Why  the  peonle  desired 
statehood.  The  problem  of  mine  taxation  in  the  second 
constitutional  convention.  The  constitutional  provision 
exempting  mines  from  taxation  and  imposing  a  tax  on 
net  proceeds.  Other  constitutional  provisions.  Constitu- 
tional amendments. 

CHAPTER  III 
TAX  ADMINISTRATION 41 

Characteristics  of  political  organization.  Propertv  assess- 
ments. Judicial  control  of  assessments.  Failure  to  secure 
uniform  assessments.  Development  of  administrative 
control.  State  Board  of  Assessors  and  Equalization. 
State  Board  of  County  Assessors.  Defects  of  assessments 
before  creation  of  Tax  Commission.  The  creation  of  the 
State  Tax  Commission.  Results  of  administrative  control 
under  the  commission. 

CHAPTER  IV 

TAXATION  OF  MINES  AND  THE  PROCEEDS  OF  MINES.™ GO 

Territorial  Taxes.  Early  legislative  favoritism.  Supreme 
Court  decisions.  The  net  proceeds  law.  Recent  minor 
amendments.  Recent  administrative  practise.  Are  the 
mining  interests  paying  their  fair  share  of  the  taxes? 
Taxes  on  net  proceeds  should  be  graduated. 

CHAPTER  V 
THE  GENERAL  PROPERTY  TAX _ 100 

Not  adapted  to  present  economic  conditions.  Reform  ham- 
pered by  constitutional  provisions.  Practical  operation 
of  general  property  tax  in  relation  to  various  classes  of 


xvi  CONTEXTS 

property:  (1)  Eeal  estate;  (2)  Live  stock;  (3)  Mortgage- 
secured  notes;  (4)  Accounts  receivable;  (5)  Bank  depos- 
its; (6)Banks  and  bank  stock;  (7)Railrpads  and  railroad  . 
land;  (8)  Other  property  of  public  utility  corporations; 
(9)  Collective -unit -valuation  and  mile -unit  apportion- 
ment in  relation  to  the  situs  of  property  of  public  utility 
corporations;  (10)  Statistics  of  assessed  valuation  of 
various  classes  of  property. 

CHAPTER  VI 
THE  INHERITANCE  TAX _ 142 

Provisions  of  the  law.  Probable  revenues.  Irregularity  of 
revenues  and  budgetary  difficulties.  A  possible  remedy. 

CHAPTER  VII 
LICENSE  AND  OTHER  BUSINESS  TAXES _ 145 

County  regulatory  licenses.  Licenses  for  gambling,  prize 
fighting  and  horse  racing.  The  sheep  license.  County 
revenue  licenses.  Licenses  for  banks,  brokers,  merchants, 
hotels.  Municipal  general  business  licenses.  State  license 
and  other  business  taxes.  Corporation  taxes  collected  as 
fees.  State  liquor  license. 

CHAPTER  VIII 
PUBLIC  EXPENDITURES 169 

Growth  of  public  expenditures.  New  governmental  func- 
tions. Statistics  of  expenditures  for  1902  and  for  1916. 
Expenditures  and  population.  Comparison  with  expen- 
ditures of  other  States.  Significance  of  increasing  pub- 
lic expenditures.  Forces  for  and  against  conservatism. 

CHAPTER  IX 
PUBLIC  INDEBTEDNESS _ 180 

Constitutional  provisions.  The  territorial  debt.  State 
indebtedness.  Peculiar  relation  of  public  borrowings  to 
the  mining  industry.  Need  of  greater  restraint  in  rela- 
tion to  borrowing.  County  indebtedness  in  early  years. 
The  Lincoln  County  bonds.  The  burden  of  public  debt. 

CHAPTER  X 
THE  PROBLEM  OF  TAX  REFORM 190 

No  program  presented.  Some  difficulties  common  to  all 
States.  Some  difficulties  more  or  less  peculiar  to  Nevada. 
Constitutional  provisions  too  rigid.  The  problem  of 
amendment.  A  proposed  amendment  to  the  constitution. 


ECONOMIC  CONDITIONS 

The  experience  of  Nevada  in  matters  of  taxation, 
while,  in  many  respects,  similar  to  that  of  the  American 
States  generally,  has  been  characterized  by  certain  fea- 
tures peculiar  to  the  West,  or  to  Nevada  alone.  The 
elements  of  similarity  owe  their  origin  to  the  fact  that  the 
people,  mainly  derived  from  the  older  States,  reenacted 
the  general  system  of  laws  with  which  they  were  familiar. 
Its  peculiarities  are  due  to  a  more  or  less  well-directed 
effort  to  adjust  the  financial  system  to  the  special  politi- 
cal, physical,  and  economic  conditions  prevailing  in  this 
State.  While  it  is  possible  to  trace  the  more  important 
features  of  Nevada's  political  institutions  to  some  of  the 
Eastern  States,  New  York  in  particular,  and  others  to 
some  of  the  Southern  States,  the  direct  debt  is  almost 
exclusively  to  California,  the  first  of  the  Commonwealths 
west  of  the  Rocky  Mountains  to  organize  state  govern- 
ment, and  the  first  to  face  the  problem  of  adapting  her 
political  institutions  to  the  demands  created  by  the 
special  physical  and  economic  conditions  of  the  far  West. 

Fortunately  the  population  of  California  was  of  a 
cosmopolitan  character,  and  from  this  fact  there  was  a 
wealth  of  suggestion  as  to  the  ways  and  means  of  such 
adaptation.  There  was  the  old  Spanish  population  which 
contributed  some  features  of  its  legal  system.  The  new 
English-speaking  population  was  drawn  from  all  parts 
l 


2  TAXATION  IN  NEVADA 

of  the  United  States,  most  largely  from  the  North,  but 
in  important  numbers  from  the  South.  The  political  and 
legal  system  with  which  California  began  statehood  owes 
most  to  that  of  New  York,  but  in  at  least  two  respects 
the  influence  of  the  Southern  States  is  manifest.  The 
county  system  of  local  government  and  the  general  busi- 
ness license  tax  for  local  purposes  were  both  southern, 
they  both  represent  adaptations  to  special  western  physi- 
cal and  economic  conditions,  and  both  were  taken  over 
and  made  a  part  of  Nevada 's  political  system. 

EARLY  SETTLEMENT  OF  THE  STATE 

In  the  early  settlement  of  the  State  and  in  the  develop- 
ment of  its  resources,  Nevada  had  an  unusual  experience. 
A  few  tavern-keepers  and  small  farmers  at  way  stations 
along  the  "Overland  Route"  constituted  the  chief  popu- 
lation of  Nevada  before  1859.  In  that  year  the  famous 
Comstock  Lode  was  discovered,  and  by  1860  the  region 
that  is  now  Nevada  had  6,857  people,  most  of  them 
located  in  or  near  Virginia  City,  the  new  mining  camp. 
The  next  year,  when  the  Territory  of  Nevada  was 
organized,  there  were  16,374  people  mainly  in  the  same 
locality.  By  1864  when  the  Territory  became  a  State, 
the  population  was  about  fifty  thousand.  About  two- 
thirds  of  this  population  was  economically  dependent 
upon  the  Comstock  mines  and  most  of  the  remainder 
upon  other  mines. 

Nevada  was  not  settled  in  the  westward  movement, 
but  in  a  rebound  from  that  movement.  Most  of  the 
early  miners  came  from  California  whose  placer  mines 
were  declining  in  importance  when  the  Comstock  was 


PHYSICAL  CONDITIONS  3 

discovered.  Since  California,  in  her  ten  years  of  experi- 
ence, had  worked  out  a  political  system  more  or  less 
adapted  to  the  conditions  prevailing  in  a  pioneer  mining 
State,  it  was  natural  and  logical  that  the  constitutional, 
legal,  and  fiscal  system  of  that  State  should  serve  as  a 
model  for  Nevada.1  As  a  matter  of  fact,  the  California 
institutions  were  set  up  in  Nevada  bodily,  with  few  modi- 
fications. 

So  far,  however,  as  the  system  of  public  finance  was 
concerned,  these  borrowed  institutions  represented  in 
a  large  measure  a  mere  rough  adjustment  to  pioneer  con- 
ditions. The  system  of  taxation  was  workable,  and  it 
made  possible  the  carrying  on  of  state  and  local  gov- 
ernment, but  in  no  sense  was  it  a  system  adapted  to  the 
permanent  needs  of  Nevada. 

PHYSICAL  CONDITIONS 

Any  intelligent  view  of  Nevada's  system  of  taxation 
must  be  based  upon  a  clear  understanding  of  certain 
main  features  of  its  economic  development,  and  of  the 
physical  conditions  which  have  controlled  this  develop- 
ment. The  entire  area  of  Nevada  lies  in  the  arid  or  semi- 
arid  region  east  of  the  Sierra  Nevada.  The  region  is, 
in  the  main,  a  plateau  of  from  four  thousand  to  five 
thousand  feet  elevation,  interspersed  by  a  large  number 
of  parallel  ranges  of  mountains  commonly  reaching  a 
height  of  about  eight  thousand  feet,  but  with  a  few 
higher  ranges,  and  with  occasional  peaks  from  ten  to 

'The  thirty-four  members  who  sat  in  the  Constitutional  Convention 
(1864)  represented  eleven  States  and  three  foreign  countries  in  their 
nativity.  All  but  two  of  them,  however,  came  to  Nevada  from  California 
where  they  had  lived  for  an  average  period  of  about  nine  years.  See 
Nevada  Constitutional  Debates,  p.  xvi. 


4  TAXATION  IN  NEVADA 

thirteen  thousand  feet  above  the  sea-level.  The  precipi- 
tation is  confined  almost  wholly  to  the  winter  months 
of  the  year,  the  growing  season  being  practically  rain- 
less. The  precipitation  in  the  valleys  of  the  northern 
half  of  the  State  is  from  five  to  ten  inches  a  year.  In 
the  mountains  the  snowfall  is  greater,  varying  according 
to  the  altitude.  Only  the  higher  mountains,  however, 
receive  a  sufficient  fall  of  snow  to  give  rise  to  perennial 
streams.  In  the  southern  part  of  the  State  the  precipita- 
tion become  negligible  in  the  valleys  and  even  the  moun- 
tain snows  give  rise  to  only  a  few  very  small  streams. 

There  are  four  rivers  of  considerable  size  in  Nevada, 
all  in  the  northern  and  west  central  part  of  the  State. 
Three  of  these,  the  Truckee,  the  Carson,  and  the  Walker, 
rise  in  the  Sierra,  and,  after  serving  to  water  some  fer- 
tile lands,  each  ends  its  course  in  a  lake  where  the  unused 
waters  evaporate.  The  Humboldt  River  has  its  origin 
in  the  higher  ranges  of  northeastern  Nevada,  and  flows 
in  a  general  westerly  direction  two-thirds  of  the  distance 
across  the  State  to  Humboldt  Lake.  These  four  rivers 
collectively  supply  over  four-fifths  of  all  water  used  for 
irrigation.  Agriculture  is  confined  mainly,  therefore, 
to  the  northern  half  of  the  State. 

With  small  exception  only  such  land  as  is  capable  of 
being  irrigated  has  been  cultivated.  The  mountains, 
however,  furnish  pasturage  for  sheep  and  cattle.  The 
pasturage  is  found  chiefly  in  the  northern  part  of  the 
State  where  the  snowfall  is  more  abundant.  Because  of 
the  relatively  large  area  of  range  pasture  land  and  of 
the  small  area  of  irrigated  land,  the  use  of  the  irrigated 
area  is  dominated  by  the  needs  of  the  livestock  industry. 


AGRICULTURE  AND  STOCK  RAISING  5 

AGRICULTURE  AND  STOCK  RAISING 

Agriculture  and  stock  raising  have  developed  along 
lines  peculiar  to  Nevada.  According  to  the  census  of 
1910  less  than  four  per  cent  of  the  area  of  the  State  was 
in  farms,  and  nearly  three-fourths  of  this  was  unimproved 
range  land.  Most  of  the  land  still  belongs  to  the  National 
Government,  but  it  has  been  utilized  for  pasturage  by 
the  owners  of  great  flocks  and  herds. 

Perhaps  the  most  marked  characteristic  of  this  range 
stock  farming  is  the  magnitude  of  its  units.  The  aver- 
age size  of  Nevada  farms  was,  according  to  the  census  of 
1910,  1,009  acres;  but  344  of  these  farms  embracing 
82.8%  of  all  land  in  farms  and  70.2%  of  all  improved 
land,  and  having  53.8%  of  the  value  of  all  farms,  had  an 
average  size  of  6,530  acres.  The  largest  of  these  holdings 
embraces  an  area  of  over  one  hundred  and  seventy-five 
thousand  acres,  and  several  others  vary  in  area  from 
fifty  thousand  to  a  hundred  thousand  acres.  These  large 
holdings  are  not  in  the  form  of  solid  tracts,  but  they, 
follow  streams  in  such  a  way  as  to  control  the  water 
supply  of  a  region  of  much  greater  extent,  and  thus 
they  control,  in  some  measure,  the  pasturage  of  vast 
regions. 

Under  existing  conditions  large  ownership  has  certain 
economic  advantages.  Some  ranges  can  be  used  only  in 
winter  because  there  is  no  drinking  water  in  summer. 
Others  covered  with  deep  snow  in  winter  are  valuable 
in  midsummer.  Still  others  are  adapted  to  spring  or  to 
autumn  use.  The  stockman,  particularly  the  sheep  man, 
finds  it  advantageous  to  own  several  ranches  sufficiently 
far  apart  to  secure  desirable  differences  in  climatic  con- 


6  TAXATION  IN  NEVADA 

ditious.  In  the  course  of  the  year  a  band  of  sheep  may 
travel  from  the  northern  summer  range  to  the  southern 
winter  range  two  or  three  hundred  miles  distant.  A 
smaller  range  is  feasible  for  cattle,  since  they  are  fed  in 
winter. 

Through  incorporation  and  combination  a  further  con- 
centration of  control  is  effected,  so  that  most  of  the  land 
and  live  stock  of  the  State  are  owned  by  less  than  sixty 
large  owners,  chiefly  corporate,  and  the  tendency  is 
toward  further  combination.  As  long  as  the  National 
Government  fails  to  exercise  control  over  the  public 
range  lands  of  Nevada  it  appears  to  be  probable  that  the 
livestock  industry  will  continue  to  be  conducted  on  the 
basis  of  large  units,  for  by  this  means  a  more  peaceful 
use  of  the  range  pastures  is  secured.1 

The  early  agriculture  of  Nevada  developed  as  an  indus- 
try secondary  to  mining.  Since  supplies  of  hay  and 
grain  could  be  brought  into  the  State  only  by  expensive 
ox-team  freight  over  the  Sierra  Nevada,  the  prices  of 
farm  produce  were  very  high,  and  this  served  to  stimu- 
late a  certain  amount  of  agriculture  in  the  vicinity  of 
the  more  important  mining  camps.  The  chief  products 
were  hay, .  barley,  wheat,  oats,  and  potatoes,  together 
with  the  heavier  garden  vegetables.  Less  wheat  was 
grown  after  the  Central  Pacific  Railroad  was  built,  and, 
with  the  decline  of  mining,  there  was  a  decline  in  the 
production  of  other  cereals  and  of  potatoes  and  dairy 
products,  so  that  in  1890,  twenty-six  years  after  the 
admission  of  Nevada  to  statehood,  the  entire  area  devoted 
to  cultivated  crops,  excluding  hay,  was  about  sixteen 

'See  "Public  Range  Lands — a  New  Policy  Needed,"  in  the  American 
Journal  of  Sociology,  November,  1916. 


AGRICULTURE  AND  STOCK  RAISING  7 

thousand  acres  or  two-thirds  of  a  township.  The  pro- 
duction of  hay  increased  steadily,  but  after  1880  it 
was  grown  less  for  use  in  mining  camps  and  more  in 
connection  with  range  livestock  interests. 

In  recent  years  there  has  been  a  slight  tendency  toward 
diversified  farming.  The  cereals  are  grown  more  largely, 
potato  cultivation  is  important  in  a  few  valleys,  and 
there  is  an  increase  of  dairying  and  gardening,  but  the 
State  still  imports  considerable  wheat  and  other  cereals 
as  well  as  fruits  and  vegetables  for  its  consumption, 
while  the  use  of  the  cultivable  lands*  continues  to  be 
dominated  by  the  needs  of  the  range  livestock  industry. 

STATISTICS  SHOWING  THE  DEVELOPMENT  OF  AGRICULTURE 
AND  STOCK  RAISING  IN  NEVADA 


Number  of 
Farms1 

Acres  Irrigated 

Value  of  Farm 
Crops* 

1800 

91 

1870 

1,036 

47,309" 

1.659.713 

1880 

1,404 

116,377* 

2,855.449 

1890 

1.277 

224.4031 

2,705,660 

1900 

2.184 

504,168' 

2.887.569 

1910 

2,687 

701,S331 

5,923,536 

LIVE  SxocK1 

Number  of 
Cattle 

Number  of 
Sheep 

Value  of  Live  Stock  of 
All  Kinds  on  Farms 

1860 

5.461 

376 

$177,638 

1870 

31,516 

11,018 

1.445,499 

1880 

172.221 

133,695 

4,233,749 

1890 

210.800 

273,469 

5,801,820 

1900 

385,190 

887.039 

12.169.565 

1910 

449.681 

1,154.795 

19,213.930 

JU.  S.  Census. 

"Reported  as  "cultivated"  in  the  reports  of  the  Surveyor-General. 


TAXATION  IN  NEVADA 


FARM  CROPS1 


1870 
1880 
1890 
1900 
1910 


Wheat 
Bushels 

228,866 

69,298 

81,486 

151,176 

396,075 


Barley 
Bushels 

295,452 
513,470 
237,192 
224,035 
412,149 


Oats 
Bushels 

55,916 
186,160 

99,126 
450,812 
334,973 


Potatoes 
Bushels 

129,249 
302,143 

189,294 
361,188 
766,826 


Hay 
Tons 

33.855 

95,853 

225,827 
419,812 
521,918 


VALUE  OF  ALL  CROPS  IN  NEVADA  FOR  19091 

Hay  and  forage $4.is.",.ii71 

Cereals .'. 923.763 

Vegetables,  chiefly  potatoes 661,803 

Fruits  and  nuts 102.811 

Other  grains  and  seeds 3,988 

All  other  crops 4(5.100 

Total - $5.923.536 

About  55%  of  the  acreage  in  hay  grew  wild  hay.  Less  than 
forty-two  thousand  acres  was  devoted  to  cultivated  crops, 
excluding  hay,  in  1909.  •  Less  than  6%  of  the  irrigated  land 
was  in  tillable  crops. 

FARMS  DISTRIBUTED  ACCORDING  TO  SIZE,  AVERAGE  NUMBER  OF 
ACRES  TO  FARMS  OF  EACH  SIZE  CLASS,  TOTAL  NUMBER  OF 
ACRES  IN  FARMS  OF  EACH  SIZE  CLASS,  AND  PER  CENT  OF 
ALL  FARM  LAND  IN  FARMS  OF  EACH  SIZE  CLASS  FOR  19101 


Under  3  acres      .    .  . 

Number 
of  Farms 

..  ..  87 

Average 
Number 
of  Acres, 
to  the 
Farm 

Total 
Number  of 
Acres  in 
all  Farms 
of  the  size 

Per  cent  of 
all  Farm 
Land  in 
Farms  of 
each  size 

Under  20  acres  

271 

6.9 

1,874 

0.08 

20-49  acres  

320 

32.2 

10.328 

0.4 

50-99  acres          ..  .    . 

...    .411 

76.5 

31,455 

1.2 

100-174  acres  

555 

147.0 

81.615 

3.0 

175—499  acres 

540 

309.0 

167,232 

6.2 

500-999  acres     . 

.    ...248 

708.0 

175.691 

6.5 

1,000  or  more  acres... 

344 

6,530.0 

2.246.562 

82.8 

'From  the  U.  S.  Census  Reports. 


MINING  9 

MINING 

The  chief  resources  of  Nevada  are  its  mines  of  gold, 
silver,  and  copper.  The  early  history  of  the  State  centers 
about  a  few  mining  camps,  of  which  Virginia  City,  the 
leading  camp  of  the  famous  Comstock  Lode,  was  the 
most  important.  The  mining  of  gold  and  silver,  an 
unstable  industry  at  all  times,  approached  a  maximum 
of  instability  in  the  early  days  of  Nevada.  The  lack  of 
convenient  supplies  of  wood,  water,  and  provisions  com- 
bined with  the  costly  ox-team  transportation  over  the 
high  Sierras  and,  in  the  case  of  some  camps,  across 
desert  wastes,  served  to  make  mining  operations  very 
expensive.  The  less  developed  state  of  technical  science 
had  a  similar  effect.  As  a  consequence,  only  the  richer 
ores  could  be  utilized  profitably  and  this  served  to 
emphasize  the  transient  and  spectacular  features  of  the 
industry. 

Moreover,  since  mining  developed  in  advance  of  agri- 
culture, there  was,  in  the  early  period,  no  other  basic 
industry.  What  little  agriculture  there  was  consisted 
of  the  growing  of  hay,  grain,  and  vegetables  for  the 
mining  camps,  and  it  depended  for  its  existence  on  the 
very  high  prices  created  by  the  demand  of  the  mining 
camps.  The  whole  economic  structure  of  society  was, 
.for  the  time  being,  as  unstable  as  the  mining  industry 
upon  which  it  rested. 

Most  of  the  American  States  began  their  development 
as  agricultural  communities,  manufacture  and  mining 
coining  later  and  remaining  permanently,  or  at  least 
for  a  long  period,  of  secondary  importance.  This  agri- 
cultural basis  gave  them  a  marked  degree  of  stability 


10  TAXATION  IN  NEVADA 

even  from  the  beginning.  In  Nevada  the  situation  was 
different.  When  about  fifty  thousand  people  had  been 
attracted  to  the  Territory  by  the  fame  of  a  mining  camp, 
it  received  the  doubtful  boon  of  statehood  while  as  yet 
it  possessed  small  population  and  wealth  and  little  social 
and  economic  stability. 

The  following  statistics  of  the  production  of  the  mines 
of  Nevada  are  taken  from  the  reports  of  the  State  Min- 
eralogist for  the  years  preceding  1867  and  for  the  years 
1871  to  1878,  and  from  the  Controller's  reports  for  the 
other  years.  Before  1878  the  reports  are  for  the  calendar 
years,  and  after  that  date  for  the  twelve  months  ending 
September  30. 

In  the  report  of  the  State  Mineralogist  for  1865,  it  is 
estimated  that  the  Comstock  alone  had  produced  about 
$45,000,000  in  the  five  or  six  years  following  its  discov- 
ery, the  production  for  1865  being  $9,316,083.54.  In 
1866  the  production  of  the  entire  State  was  $16,421,- 
381.98,  of  which  amount  over  92%  was  from  the  Com- 
stock. 

The  production  of  the  State  for  the  whole  period 
1866-1917  was  as  follows : 

1860 $16,421,381   1877 $46,661,831 

1867 16,172,502   1878 38,531.888 

1868 13,295.311   1879 18.997.819 

1869 10.021,567   1880 13,655.967 

1870 11,757,896   1881 9,505,971 

1871 20.010.175   1882 7,724.022 

1872 24.722,249   1883 7,487,634 

1873 32,057,577   1884 6,748,573 

1874 29.587,379   1885 6.847,405 

1875 35,252,585   1886 6,585.839 

1876....      ..  45,653.477   1887....         6.942.716 


11 

1888 $9,580,373  11)08 $2.248,045 

1889 7,734,810  1904 3,448,936 

1890 6,804.231  1905 4,918,082 

1891 5,948,503  1906 6,963,386 

1892 4.100,133  1907 17,288,223 

1893 2,501,169  1908 12,899,869 

1894 928,704  1909 21,747,280 

1895 1,723,671  1910 29,506,005 

1896 4.062,921  1911 31,983,160 

1897 3,319,026  1912 34,933,518 

1898 2,764,563  1913 29,316,479 

1899 2,142,273  1914 20,858,665 

1900 1,880,147  1915 26,611,132 

1901 2,944,160  1916 39,921,733 

1902 2,900,913  1917 42.630,532 

From  1864,  the  date  of  the  State's  admission  into  the 
Union,  till  about  1880  mining  continued  to  dwarf  all 
other  industries,  1877  being  the  year  of  maximum  pro- 
duction. From  1880  to  1902  the  mining  industry  lan- 
guished partly  because  the  old  bonanzas  had  been  worked 
out  and  no  new  mines  of  equal  richness  had  been  dis- 
covered, partly  on  account  of  litigation,  and  partly 
because  of  the  decline  in  the  value  of  silver.  During 
the  last  fifteen  years  there  has  been  a  revival  of  mining, 
but  under  different  conditions.  The  progress  in  mining 
technology,  the  development  of  transportation  agencies, 
and  the  production  of  a  greater  amount  of  hay  and 
farm  crops  all  combine  to  make  it  profitable  to  utilize 
ores  of  lower  grade  than  could  be  used  in  the  earlier 
period.  Moreover,  the  mineral  production  of  recent 
years  is  not  so  largely  from  any  one  camp,  there  being 
at  least  three  widely  separated  camps  of  first  importance, 
besides  many  others  which  produce  great  values  in  the 


12  TAXATION  IN  NEVADA 

aggregate.  All  of  these  factors  count  for  greater 
economic  stability. 

Since  the  early  history  of  the  State  is  mainly  an 
account  of  the  development  of  a  few  successful  mining 
camps  and  of  a  large  number  of  hopes  that  failed,  it 
may  be  well  to  point  out  those  features  of  the  evolution 
of  a  mining  camp  which  are  significant  from  the  stand- 
point of  taxation. 

There  are  at  least  three  pretty  well-defined  stages  in 
the  history  of  a  successful  mining  camp  which  may  be 
named:  (1)  The  period  of  prospecting,  promotion,  and 
development;  (2)  the  period  of  large  production;  and 
(3)  the  period  of  decline.  Many  camps  never  get  beyond 
the  first  stage,  while  others  may  pass  directly  from  the 
first  to  the  third. 

In  the  beginning  a  prospector  "makes  a  strike,''  dis- 
covers gold-  o"r  silver-bearing  ore  under  conditions  which 
give  rise  to  hopes  that  great  values  lie  hidden  in  the 
vicinity.  He  proceeds  to  locate  the  ledge  under  sus- 
picion, and  establishes  his  claims,  possibly  giving  his 
friends  a  chance  to  establish  similar  claims.  (The  land 
is,  in  nearly  all  cases,  owned  by  the  United  States  Gov- 
ernment.) At  a  certain  time  the  news  of  the  "strike"  is 
permitted  to  be  made  public,  and  a  considerable  degree 
of  interest  may  be  aroused  among  miners  in  a  more  or 
less  widely  extended  region.  If  the  story  of  the  strike 
is  a  good  one  and  well  told,  there  will  be,  in  the  course 
of  a  few  days  or  weeks,  a  great  rush  to  the  new  camp. 
The  neighboring  mountainsides  are  prospected  in  every 
direction  and  hundreds  of  claims  may  be  located  in  the 
vicinity  of  the  original  discovery.  For  a  time  almost 


MINING  13 

any  prospect  has  a  market  value,  for  nobody  knows  what 
riches  it  may  hold.  The  rich  ores  found  in  a  few 
claims  serve  to  radiate  a  glow  of  hope  over  the  whole 
camp.  The  enthusiasm  is  contagious  and,  for  many 
people,  irresistible. 

In  the  course  of  a  few  months  the  camp  may  possess 
a  few  hundred  or  a  few  thousand  people,  nearly  all 
men — prospectors,  promoters,  miners,  carpenters,  other 
skilled  workers,  speculators,  hotel  and  boarding-house 
keepers,  merchants,  teamsters,  engineers,  lawyers,  doc- 
tors, saloon-keepers,  and  gamblers.  In  the  early  days 
such  a  camp  might  be  established  in  a  region  previously 
unpopulated  and  consequently  without  organized  gov- 
ernment. In  such  cases  the  maintenance  of  order  might 
be  secured  for  a  time  by  self-appointed  committees 
which  assumed  power  to  execute  summary  justice  when 
necessary.  In  any  case  some  regular  machinery  of  gov- 
ernment would  be  necessary  at  an  early  date  and  this 
would  call  for  revenue.  Evidently  the  ordinary  property 
tax  is  not  available  for  a  situation  of  this  kind.  The 
machinery  of  the  property  tax  is  slow  and  the  camp 
needs  revenue  at  once.  Moreover,  nobody  knows  any- 
thing about  the  value  of  the  most  important  property — 
that  is,  about  what  its  value  will  be  six  months  or  a 
year  later  at  taxpaying  time.  The  claims  may  be  worth- 
less and  the  personal  property  may  be  removed  before 
taxes  are  payable.  A  tax  on  production  of  ore  is  impossi- 
ble because  little  or  nothing  is  being  produced.  Pros- 
pecting, testing,  exploration,  development  work,  and  the 
installation  of  machinery  may  be  preliminary  to  impor- 
tant production,  but  that  lies  in  the  uncertain  future. 


14  TAXATION  IN  NEVADA 

Under  these  circumstances  the  general  business  license 
is  the  most  available  source  of  revenue.  It  has  several 
very  marked  advantages.  It  is  prompt  in  action,  since 
the  license  must  be  paid  for  in  advance.  Since  it  taxes 
consumption  and  mining  operations  indirectly,  it  taxes 
everybody,  and  this  is  fair  where  all  property  values, 
with  the  exception  of  the  imported  consumable  commodi- 
ties, are  mere  hopes,  where  nobody  knows  who  will  be 
the  millionaire  and  who  the  pauper  a  few  months  hence. 
Furthermore,  since  the  men  who  ultimately  pay  the  tax 
under  such  conditions  do  not  know  they  are  paying  it, 
there  are  no  objections  on  their  part.1  And,  finally,  no 
matter  how  the  mine  may  turn  out,  the  merchants,  stage 
drivers,  freighters,  saloon-keepers,  and  gamblers  may 
be  making  large  profits  for  the  time  being,  and  it  is  in 
accordance  with  the  sense  of  justice  of  the  community 
that  they  pay  the  taxes,  as  they  do  in  appearance. 

In  the  course  of  a  few  months  or  years,  if  it  becomes 
evident  that  the  hopes  of  the  camp  are  delusive,  the 
population  moves  to  the  next  place,  and  if  the  license 
system  has  been  applied  vigorously,  in  connection  with 
other  taxes,  the  special  bills  for  government  are  paid  and 
no  very  large  items  of  debt  are  left  to  be  paid  by  the 
scattered  farmers  and  stockmen  who  may  own  property 
in  the  vicinity. 

If,  on  the  other  hand,  the  strike  makes  good,  the  camp 
changes  its  character  and  in  the  course  of  two  or  three 
years  begins  to  take  on  the  characteristics  of  permanence 

'Since  the  wages  paid  in  a  new  camp  are  determined  to  some  extent  by 
the  cost  of  living,  it  is  probable  that  the  incidence  of  such  license  taxes  rests 
in  part  upon  the  mine  owners  who  pay  it  in  the  form  of  higher  wages  and 
higher  prices  for  materials. 


MINING  15 

as  permanence  goes  in  mining  camps.  The  second  stage 
of  development  is  at  hand.  Tents  give  way  to  houses, 
many  of  which  are  more  than  rough  lumber  shacks, 
and  some  of  which  are  well  finished.  Good  substantial 
business  blocks  are  erected.  Real  estate  has  a  value  of 
some  degree  of  stability — a  sufficient  degree,  for  pur- 
poses of  taxation  based  on  annual  assessments.  The 
production  of  the  mines  may  be  estimated  with  some 
degree  of  accuracy  for  a  year  in  advance.  Business 
profits  are  more  reliable  but  less  spectacular.  In  general, 
conditions  have  come  which  make  a  property  tax  and  a 
production  tax  feasible.  Since  many  of  the  business  men 
and  workers  who  originally  came  without  their  families 
have  now  established  homes,  there  is  need  for  schools 
and  schoolhouses.  Perhaps  the  new  camp  is  the  most 
important  place  in  the  county  and  so  it  becomes  the 
county-seat,  and  a  new  courthouse  and  a  jail  are  built. 
A  fire  department  is  established  and  the  streets  arc 
improved.  All  in  all,  a  considerable  revenue  is  needed, 
for  all  things  come  high  in  a  prosperous  mining  camp, 
and  sound  policy  demands  that  practically  all  expendi- 
tures be  met  by  means  of  taxes — that  no  bonds  be  issued 
except  for  very  short  periods — periods  not  exceeding 
the  assured  life  of  profitable  mines.  Because  of  the 
necessity  of  larger  revenues  it  is  difficult  to  abolish  any 
old  taxes,  so  the  license  system  and  the  general  property 
tax  continue  side  by  side  with  the  tax  on  the  proceeds 
of  mines. 

One  fact  stands  out  preeminent.    As  long  as  the  mines 
continue  to  be  big  profitable  producers,  all  other  sorts 


16  TAXATION  IN  NEVADA 

of  business  are  prosperous  and  the  camp  is  able  to  con- 
tribute largely  toward  the  public  revenues. 

In  the  course  of  time — perhaps  three  or  four  years  or, 
may  be,  ten  or  twenty  years — the  rich  ores  are  removed 
from  the  mine  and  the  period  of  decline  begins.  Most  of 
the  workmen  are  laid  off  and  they  leave  for  new  "dig- 
gings." Naturally  all  classes  of  business  men  suffer 
through  the  loss  of  customers.  The  mines  may  still  pro- 
duce a  small  amount  of  ore,  sometimes  at  a  small  profit, 
or  possibly  at  a  loss,  the  difference  being  paid  by  the 
stockholders  who  still  have  hopes  that  another  bonanza 
will  be  discovered.  At  this  stage  public  revenues  are 
raised  with  difficulty.  The  value  of  all  forms  of  immov- 
able -property  may  be  almost  negligible.  Labor  is  irregu- 
larly employed.  It  sometimes  happens  that  property  is 
assessed  at  much  more  than  its  selling  value  and  at  the 
same  time  the  local  tax  rate  may  be  extremely  high. 

The  above  description  applies  only  to  the  more  impor- 
tant camps.  Many  mines,  though  developed  and  operated 
for  several  years,  never  become  profitable,  although  it 
may  pay  the  owners  to  remove  a  certain  amount  of  the 
better  ore  after  they  have  incurred  the  expense  of  devel- 
opment. Many  small  mining  camps  never  call  for  any 
special  governmental  organization.  Some  very  profit- 
able mines  have  been  operated  without  any  excitement 
connected  with  stock  promotion  or  speculation.  Some 
mines  are  abandoned  pretty  promptly  when  they  cease 
to  be  profitable. 

The  early  spectacular  development  of  the  gold  and 
silver  mining  followed  by  its  decline  and  by  the  slower 
and  more  stable  growth  of  livestock  interests  and,  more 


TRANSPORTATION  17 

recently,  by  a  more  diversified  economic  development 
including  both  mines  and  live  stock,  is  reflected  in  the 
following  statistics  of  population : 

POPULATION  OF  NEVADA  FROM  18GO  TO  1917  (INDIANS  EXCLUDED) 

1800' 6,857  18801 59,463 

18612 16,374  18901 40,605 

18G43 50,000  19001 37,119 

1870' 42,468  19073 90,000 

18754 52,540  19101 76,635 

18773 70,000  19173 85,000 

TRANSPORTATION 

The  Central  Pacific  Railroad,  completed  in  1869,  has 
been  of  the  highest  economic  importance  to  the  State, 
not  only  as  a  transportation  agency,  but  as  a  taxpayer 
as  well.  Separated  from  the  rest  of  the  world  by  high 
mountains  and  by  deserts  and  possessing  no  navigable 
waters,  Nevada's  need  for  transportation  agencies  was 
very  great.  Moreover,  the  peculiar  character  of  the 
industry  of  the  State  has  emphasized  the  dependence  on 
railroads.  Nearly  everything  produced  in  Nevada  is 
exported  and  the  greater  part  of  all  that  is  used — food, 
clothing,  lumber,  fuel,  tools,  machinery — is  imported. 

At  present  there  are  three  transcontinental  railroads 
passing  through  the  State  and  a  number  of  lines  of  local 
importance  reach  some  of  the  more  important  mining 
and  agricultural  regions.  Taken  as  a  whole,  the  railroads 
have  contributed  greatly  to  the  economic  and  financial 
stability  of  Nevada,  creating  in  large  measure  the  values 

'U.  S.  Census. 

^Territorial  Census. 

"Estimate  based  on  number  of  votes,  school  census,  and  other  data. 

'State  Census. 


18  TAXATION  IN  NEVADA 

of  mines  and  of  agricultural  and  grazing  land,  and  con- 
tributing directly  to  the  public  revenues  beyond  any 
other  single  interest.  So  unequal  is  the  geographical 
distribution  of  resources  and  of  wealth  in  Nevada  that 
it  sometimes  happens  that  the  chief  property  of  a  county 
is  the  railroad  running  through  it.  In  several  counties 
the  railroads  have  paid  over  sixty  per  cent  of  the  county 
tax — in  one  case  as  much  as  sixty-nine  per  cent.  In  one 
instance  the  building  of  a  railroad  within  its  borders 
rescued  a  county  from  a  long-standing  failure  to  meet 
its  interest  obligations. 

Any  just  view  of  taxation  in  Nevada  must  take  into 
consideration  these  peculiar  economic  conditions:  (1) 
The  State  has  had  a  very  small  and  unstable  population 
at  all  times.  (2)  Its  industrial  development  lacks  diver- 
sification and  its  chief  industry,  mining,  has  been  very 
unstable.  (3)  The  agricultural  lands  are  of  very  small 
area  and  they  are  found  in  large  holdings  and  in  a  low 
state  of  cultivation.  (4)  The  transcontinental  railroads 
serving  a  wider  region  possess  greater  stability  of  value 
and  they  have  contributed  the  most  important  element 
of  stability  to  the  financial  system  of  the  State. 


CHAPTER  II 
TAXATION  IN  THE  CONSTITUTION 

1  Nevada  had  two  constitutional  conventions  preceding 
its  admission  to  statehood.  The  first  convention  met  in 
1863  and  the  constitution  formulated  by  it  was  rejected 
by  the  people  at  the  ensuing  election  chiefly  on  account 
of  matters  relating  to  taxation,  the  article  on  this 
subject  being  unsatisfactory  to  the  mining  interests.1 

Most  of  the  early  mining  population  of  Nevada  had 
come  from  California  where  it  had  been  the  custom  not 
to  tax  mines,  although  the  constitution  of  that  State  pro- 
vided for  a  uniform  tax  on  all  property.  The  general 
property  tax  was  an  impossibility  in  the  case  of  the 
placer  claims,  which  alone  were  mined  in  the  earlier 
years,  because  of  their  very  transient  value.  The  valu- 
able claims  of  assessment  time  might  be  worked  out  and 
worthless  by  taxpaying  time.  Later  the  custom  was 
carried  over  and  applied  to  quartz-ledge  mines,  even 
though  they  had  greater  stability  of  value.2 

The  people  of  Nevada  were,  therefore,  familiar  with 
the  exemption  of  mines,  and  such  is  the  influence  of 
custom  in  determining  men's  ideas  of  justice  that  it  is 
probable  that  mines  would  have  been  exempted  in  Nevada 
without  any  serious  discussion  had  there  been  sufficient 
property  of  other  sorts  to  bear  the  burden  of  taxation 
easily.  But  the  Nevadans  were  also  former  residents  of 

JIt  provided  for  the  taxation  of  mines  under  the  provisions  of  the  general 
property  tax. 

^Statutes  of  California,  1857,  p.  326. 


20  TAXATION  IN  NEVADA 

the  eastern  part  of  the  country  where  they  were 
familiar  with  the  general  property  tax  and  where  its 
justice  was  popularly  regarded  as  axiomatic.  Conse- 
quently the  nonmining  interests,  when  weighed  down 
by  an  excessive  burden  of  taxation  due  to  the  exemption 
of  the  mines,  turned  to  the  theory  of  the  general  prop*- 
erty  tax  as  a  means  of  equalizing  the  burden.  This  ten- 
dency was  strengthened  by  the  fact  that  two*  efforts  on 
the  part  of  the  Territory  to  secure  revenue  from  the 
mines  through  a  production  tax  had  not  met  with  much 
success  on  account  of  the  opposition  of  the  mine  owners. 
In  view  of  the  previous  opposition  of  the  mine  owners 
to  taxation  of  any  sort,  and  in  view  of  the  predominant 
power  and  influence  of  the  mining  interests,  it  was 
pretty  evident  to  the  members  of  the  convention  that 
the  only  way  to  make  sure  of  a  revenue  from  the  mines 
was  to  include  a  specific  and  unequivocal  requirement 
to  that  effect  in  the  constitution.  The  following  article 
was  adopted : 

The  Legislature  shall  provide  by  law  for  a 
uniform  and  equal  rate  of  assessment  and  taxa- 
tion and  shall  prescribe  such  regulations  as 
shall  secure  a  just  valuation  for  taxation  of  all 
property  both  real  and  personal,  including 
mines  and  mining  property;  excepting  such 
property  only  as  may  be  exempted  by  law  for 
municipal,  educational,  literary,  scientific,  relig- 
ious, or  charitable  purposes.1 

There  were  some  people  who  opposed  statehood  because 
of  the  smallness  of  the  population2  and  because  of  the 

'Printed  in  proceedings  of  the  second  constitutional  convention,  p.  30. 
:The  population  was,  in  I860,  6,867  ;    in  1861,  16,374.     The  estimated  popu- 
lation in  1863  was  50,000. 


THE  SECOND  CONVENTION  21 

lack  of  stability  in  the  chief  industry  of  the  Territory 
and  because  of  the  lack  of  agricultural  resources.  There 
was  also  a  degree  of  mistrust  of  the  character  of  the 
men  likely  to  exercise  powej*  under  the  proposed  state 
government.  But  the  chief  opposition,  the  effective 
opposition,  arose  from  the  fear  of  taxation.  The  organ- 
ized fight  was  directed  mainly  against  the  specific 
mention  of  mines  in  connection  with  the  general  prop- 
erty tax.1  The  opposition  of  the  few  small  agricultural 
districts,  which  were  situated,  for  the  most  part,  in  non- 
mining  counties  not  far  distant  from  the  mines,  was 
based  on  their  belief  that  they  had  little  or  nothing  to 
gain  from  statehood  except  higher  taxes.  Consequently 
the  constitution  was  rejected  by  a  large  majority,  every 
county  giving  a  majority  against  it. 

THE  SECOND  CONVENTION 

Notwithstanding  the  large  vote  against  statehood  in 
1863,  a  second  convention  was  called  the  following  year — 
this,  too,  in  the  face  of  a  decrease  in  the  production  of 
the  leading  mines  and  of  a  great  shrinkage  in  the  value 
of  mining  stocks  and  of  other  mining  property.2  The 
Government  at  Washington  was  anxious  to  secure  the  one 

'"Then,  in  regard  to  the  basis  of  revenue,  I  think  it  unmistakably  apparent 
that  the  last  constitution  was  rejected  because  the  mines  were  taxed  ;  there 
can  be  no  question  as  to  that  proposition.  Now,  if  there  is  to  be  a  constitution 
submitted  to  the  people,  leaving  that  clause  out,  or  recommending  the  propo- 
sition that  the  mines  shall  not  be  taxed,  I  think  it  would  undoubtedly  be  satis- 
factory to  the  people  in  that  regard."  Mr.  Dunne  in  Constitutional  Debates, 
p.  10. 

All  references  to  the  Constitutional  Debates  are  to  the  debates  of  the  sec- 
ond convention,  the  debates  and  proceedings  of  the  first  convention  not  being 
published. 

-"But  I  do  not  believe  that  it  is  right  to  do  any  such  thing  as  to  tax  the 
mines  at  their  market  value.  Why,  sir,  what  would  have  been  the  result  in 
the  past  year  if  we  had  taxed  all  our  mines  at  the  full  market  value  which 


22  TAXATION  IN  NEVADA 

additional  vote  necessary  for  the  adoption  of  the  amend- 
ment to  the  United  States  Constitution  prohibiting  slav- 
ery and,  to  this  end,  it  appeared  necessary  to  admit  a 
new  State.  Locally,  the  sentiment  had  become  more 
favorable  to  statehood  on  account  of  the  inadequacy  of 
the  territorial  courts.  Apparently,  the  depression  in 
mining  activity  in  1864  was  due  in  considerable  measure 
to  the  large  amount  of  litigation  and  to  the  delay  in  such 
litigation  on  account  of  the  congestion  of  the  court 
dockets.1  There  was  also  a  feeling  that  the  Judges 
appointed  by  the  Federal  Government  were  incompe- 

they  bore  at  the  time  of  assessment?  We  then  assessed  the  Gould  and  Curry 
at  six  thousand  dollars  per  foot,  while  now  it  is  worth  fifteen  hundred.  *  *  * 
Savage  sold  for  five  or  six  times  as  much  then  as  now  ;  Ophir  was  worth  four 
thousand  dollars,  and  it  is  only  worth  seven  hundred  now.  Pride  of  the  West 
was  sold  for  two  hundred  and  seventy-five  dollars  then,  while  now  it  is  begging 
for  purchasers  at  two  dollars  a  foot ;  Daney  was  selling  readily  at  that  time 
for  five  hundred  dollars  and  now  it  ranges  from  forty  to  sixty  dollars  ;  Wide 
West  not  long  since  was  five  hundred  or  six  hundred  dollars,  while  now  it  is 
sold  at  forty  dollars  or  thereabouts."  Mr.  Chapin  in  Constitutional  Debates, 
p.  228. 

'"Again,  there  are  new  on  the  printed  calendar  of  the  District  Court  in 
Storey  County  nearly  four  hundred  cases  and  more  than  one-half  of  those 
cases  are  exclusively  mining  cases,  seventy-five  of  which,  at  the  outside,  will 
occupy  three  times  as  much  of  the  time  of  the  court  as  all  the  rest  put 
together. 

"There  is  a  dark  shadow  hanging  over  our  county  and,  I  think,  also  over 
many  other  counties,  on  account  of  the  difficulties  in  the  way  of  litigation. 
Cases  cannot  be  reached  on  the  dockets  of  our  courts,  probably  for  a  long 
time  to  come.  There  are,  in  our  county,  clouds  upon  the  titles  of  our  surface 
property,  and  also  upon  our  mines,  which,  on  account  of  the  difficulties  in  the 
way  of  litigation,  cannot  be  cleared  up.  Sir,  I  verily  believe  that  if  by  the 
fiat  of  the  Almighty,  those  cases  could  be  reached  today  and  cleared  from 
the  dockets  of  our  courts — if  those  clouds  could  be  cleared  up  from  the 
property,  both  the  mining  and  surface  property  of  Storey  County — that 
county  would  be  worth  five  millions  of  dollars  more  than  it  is  today."  Mr. 
Collins  in  Constitutional  Debates,  p.  326. 

"I  went  into  the  canvass  and  opposed  the  constitution  last  year.  »  *  * 
But,  sir,  since  that  time,  I  have  seen  so  many  of  the  evil  workings  of  a  terri- 
torial government  like  ours  situated  so  far  distant  from  the  central  govern- 
ment, to  which  men  are  looking  for  appointments :  I  have  seen,  in  our 
judicial  department,  such  an  extraordinary  lack  of  ability  to  come  up  to  the 
requirements  of  our  conditions,  in  the  men  who  have  received  appointments 
in  that  department,  that  I  have  come  to  the  conclusion  that  some  remedy  is 
absolutely  demanded.  Nor  is  it  alone  a  lack  of  ability  on  the  part  of  our 


THE  SECOND  CONVENTION  23 

tent  and  venal.1  It  was  believed  that  the  only  sure  way 
to  secure  relief  from  this  situation  lay  in  the  admission 
of  Nevada  to  the  Union  as  a  State. 

The  delay  and  uncertainty  incident  to  litigation  is  a 
handicap  to  any  business,  but  it  is  probable  that  no 
other  industry  suffers  so  seriously  from  this  cause  as  does 
gold  and  silver  mining.  It  is  said  that  camps  which, 
otherwise,  would  have  been  prosperous  have  been 
destroyed  through  litigation.  In  any  case  such  troubles 
added  an  element  of  irregularity  to  the  demand  for  labor 
and  to  business  activity  of  all  forms.  The  depression  of 
1864  appears  to  have  convinced  even  the  farmers  of  their 
economic  dependence  upon  the  mines,  for  in  the  autumn 
of  this  year  of  hard  times  they  supported  a  constitution 
whose  provisions  relative  to  taxation  were  less  favor- 
able to  themselves  than  those  of  the  constitution  which 
they  had  rejected  the  year  before. 

The  second  constitutional  convention  began  its  work  by 
adopting  the  work  of  the  first  convention  as  a  basis  for 
its  deliberations.  Since  the  personnel  of  this  convention 
was  in  part  different  from  that  of  the  previous  one,  there 

Judges.  Of  our  three  Judges  at  nisi  prius,  at  this  time,  one  is  sick  and  the 
others  have  absented  themselves,  and  thus  have  blocked  the  wheels  of  justice  ; 
so  that  in  reality  we  have  no  courts  at  all ;  although  I  know  and  every  lawyer 
knows  that  we  have  interests  in  litigation  so  vast  in  importance  that  the 
parties  interested  in  them  could  almost  afford  to  pay  the  expenses  of  a  state 
government  for  one  year  if  by  that  means  they  could  have  their  rights  judi- 
cially determined.  This  is  what  impels  me  to  favor  a  state  organization.  It 
is  to  obtain  the  power  of  electing  our  own  Judges,  and  just  as  many  of  them 
as  we  want,  to  transact  our  criminal  and  civil  business."  De  Long  in  Con- 
stitutional Debates,  p.  13-14. 

'There  was  another  cause  that  exerted  a  powerful  influence  upon  the 
public  mind  at  this  time,  it  being  openly  and  with  persistence  charged  by  the 
press  that  one  of  the  Supreme  Judges  of  the  Territory  neglected  his  duty 
and  rendered  decisions  favorable  to  the  highest  bidder  for  cash.  About  four 
thousand  names  were  signed  to  a  petition  asking  the  whole  bench  to  resign. 
Angel,  History  of  Nevada,  p.  85-86. 


24  TAXATION  IN  NEVADA 

was  considerable  discussion  relative  to  a  number  of 
questions,  but,  in  the  end,  no  important  change  was  made 
in  the  former  proposed  constitution  except  in  Article  X 
relating  to  taxation.  No  other  question  was  debated  at 
so  great  length  nor  with  such  deep  interest.  It  was 
generally  conceded  that  the  whole  issue  of  statehood 
turned  on  this  question.  Whatever  may  have  been  the 
merits  of  the  respective  arguments,  the  voting  strength 
lay  with  the  mining  interests,  and  an  article  exempting 
mines  and  mining  claims  from  the  operation  of  the 
general  property  tax  and  providing  for  a  tax  on  the 
proceeds  of  mines  was  adopted. 

On  account  of  the  important  place  which  the  taxation 
of  mines  occupied,  not  only  in  the  constitutional  con- 
ventions, but  also  in  early  legislation  and  litigation, 
and,  furthermore,  because  the  method  of  taxing  mines  in 
Nevada  constitutes  an  exception  to  the  customary  pro- 
vision establishing  the  general  property  tax,  it  may  be 
worth  while  to  consider  in  some  detail  the  general  situ- 
ation giving  rise  to  this  exception  and  to  the  arguments 
for  and  against  it  in  the  constitutional  convention. 

The  main  facts  of  the  situation  were  pretty  well  agreed 
upon.  Here  was  a  territory  of  great  extent  and  scanty 
population  with  but  one  basic  industry,  gold  and  silver 
mining.  All  other  industries  were  dependent  upon  min- 
ing and  mining  alone.  Merchants,  tradesmen,  and  team- 
sters were  as  truly  and  almost  as  directly  dependent 
upon  the  mines  as  were  the  miners  themselves.  What 
little  agriculture  there  was,  owed  its  existence  to  the 
demand  of  the  mining  camps  for  hay,  vegetables,  and 
milk  and  to  the  high  prices  of  these  commodities  due  to 


THE  SECOND  CONVENTION  25 

the  absence  of  railroads.  Industrial  activity  of  all  sorts 
and  all  property  values  increased  and  diminished  directly 
and  immediately  as  mining  activity  waxed  and  waned. 

Furthermore,  the  mining  of  gold  and  silver,  always 
characterized  by  great  instability,  was,  at  that  time, 
uncertain  in  the  highest  degree.  The  high  cost  of  oper- 
ating mines,  due  to  the  less  advanced  state  of  technical 
science  and  to  the  absence  of  railroads,  made  it  impossible 
to  use  low-grade  ores  profitably,  and  the  instability  of 
mining  increases  rapidly  as  the  lower  grades  of  ore  lack 
availability.  If  anything  was  needed  to  add  to  the  specu- 
lative character  of  the  industry,  that  need  was  supplied 
by  the  multiplied  litigation  partly  inherent  in  the  early 
stages  of  mining  development  and  partly  due  to  lack  of 
suitable  laws  and  a  body  of  judicial  decisions  clearly 
defining  the  rights  of  mine  owners. 

Of  the  hundreds  of  mines  and  mining  claims  which  at 
one  time  or  another  had  a  market  price,  only  a  few 
turned  out  to  have  real  value  in  the  sense  of  ability  to 
pay  to  the  operators  something  in  excess  of  the  cost  of 
development  and  operation.  In  many  cases  the  expendi- 
ture of  large  sums  of  money  in  development  work  served 
only  to  demonstrate  the  worthlessness  of  the  claim. 
Sometimes  a  mine  produced  ore  in  sufficient  quantities 
to  pay  in  whole  or  in  part  for  the  development  expenses 
in  addition  to  the  cost  of  operation.  A  few  were  large 
producers,  yielding  millions  of  returns  in  excess  of  all 
costs.  According  to  statements  made  on  the  floor  of  the 
convention,  there  was  at  that  time  no  mine  outside  of 
Storey  County  which  was  paying  dividends,  and  in 


26  TAXATION  IN  NEVADA 

that  county  there  was  only  one  paying  large  dividends. 
Even  in  the  case  of  a  mine  for  the  time  being  profitable 
it  was  impossible  to  estimate  its  value  for  the  future  with 
any  approach  to  accuracy.  In  short,  the  market  value 
of  a  mine  represented,  in  the  main,  a  combination  of 
hope,  guesswork,  and  speculative  manipulation,  and 
there  was  little  or  no  necessary  relation  between  the 
market  value  and  the  actual  value  as  measured  by 
capacity  for  future  profitable  production. 

Under  these  conditions  it  was  natural  that  the  great 
numbers  of  owners  and  shareholders  in  unimproved 
mines  should  feel  that  it  was  unjust  to  tax  their  hopes. 
A  man  may  be  willing  to  pay  something  for  a  mining 
claim  and  to  make  a  further  investment  in  its  develop- 
ment while  as  yet  its  value  is  problematic,  and  at  the 
same  time  he  may  hold  firmly  to  the  view  that  taxation 
should  be  deferred  till  there  is  a  known  value.  This 
view  derived  support  from  the  fact  that  the  rest  of  the 
business  community  was  deriving  a  certain  and  imme- 
diate profit  from  the  mining  man's  investments  in  a 
hazardous  enterprise.  He  might  lose  all,  but  the  mer- 
chants, farmers,  tradesmen,  and  laborers  might  be  sure 
of  their  gains  derived  through  his  expenditures.  Since 
the  people  generally  were  investors  in  mining  shares,  the 
justice  of  this  view  was  pretty  widely  conceded,  and 
many  even  held  that  the  mines  should  be  wholly  exempt 
from  taxation. 

While  the  owners  of  the  big  profitable  mines  could  not, 
of  course,  advance  this  consideration  as  a  ground  for  the 
exemption  of  their  own  property,  it  appears  that  they 


THE  SECOND  CONVENTION  27 

were  more  than  willing  to  escape  taxation  under  cover  of 
sympathy  for  the  poor  prospector.  If  the  situation 
could  be  sufficiently  confused  in  the  popular  mind  it 
would  be  possible  for  all  to  escape  together.1 

On  the  other  hand,  there  was  but  a  small  amount  of 
property  in  the  Territory  aside  from  mines,  and  if  mines 
should  be  made  exempt  from  taxation  the  burden  of 
supporting  a  state  government  would  be  unduly  onerous 
upon  other  interests.  It  was  maintained  that  the  small 
property  interests  of  the  Territory  could  not  bear  the 
burden  and  that,  inasmuch  as  the  mining  interests  alone 

'"I  admit  that  a  great  deal  was  said — and  very  ingeniously  said,  too — 
against  the  policy  of  taxing  a  hole  in  the  ground,  and  bedrock  tunnels  and  all 
that,  and  about  legislating  against  the  'poor  miner'  by  the  men  who  claimed 
to  represent  the  'poor  miner'  particularly  ;  but  that  'poor  miner"  was  a  hum- 
bug and  a  myth.  He  has  been  aptly  pictured  as  holding  in  one  hand  a  num- 
ber of  shares  of  Gould  and  Curry  stock,  a  like  amount  of  Ophir  stock  in  the 
other  hand,  and  a  quantity  of  Savage  stock  protruding  from  his  pocket 
behind ;  with  a  rotund  belly  and  a  hawk  nose,  and  dressed  like  a  regular  San 
Francisco  'Cent-per-cent.'  That  is  the  poor  miner  who  was  talked  about 
so  much.  The  truth  is  that  the  miners  who  are  proposed  to  be  protected  in 
this  way  are  those  men  who  never  had  any  interest  in  our  community — men 
who  do  not  live  here  at  all.  Now  I  should  be  willing  to  do  anything  to  aid 
the  laboring  classes — anything  to  aid  that  class  of  poor  men  which  my  honor- 
able friend  from  Storey,  Mr.  William  M.  Stewart,  so  eloquently  depicted  in 
the  last  convention,  men  whose  hopes,  he  said,  were  about  to  be  taxed."  Mr. 
Collins  in  Constitutional  Debates,  p.  325. 

Among  the  opponents  of  a  tax  on  mines  in  the  first  convention  was 
William  M.  Stewart,  who  later  became  United  States  Senator  from  Nevada. 
Mark  Twain,  at  that  time  a  reporter  for  the  Territorial  Enterprise,  in  a 
humorous  sketch  represents  Stewart  as  saying : 

"Mr.  President:  I  insist  upon  it,  that  if  you  tax  the  mines,  you 
impose  a  burden  upon  the  people  which  will  be  heavier  than  they  can 
bear.  And  when  you  tax  the  poor  miner's  shafts  and  drifts  and  bed- 
rock tunnels  you  are  not  taxing  his  property  ;  you  are  not  taxing 
his  substance  ;  you  are  not  taxing  his  wealth — no,  but  you  are  taxing 
what  may  become  property  some  day  or  may  not ;  you  are  taxing  the 
shadow  from  which  the  substance  may  eventually  issue  or  may  not : 
you  are  taxing  the  visions  of  Alnaschar,  which  may  turn  to  minted 
gold  or  only  prove  the  forerunners  of  poverty  and  misfortune.  In 
a  word,  sir,  you  are  taxing  his  hopes,  taxing  the  aspirations,  of  his 
soul,  taxing  the  yearnings  of  his  heart  of  hearts."  Quoted  from 
Angel's  History  of  Nevada,  p.  82. 


28  TAXATION  IN  NEVADA 

needed  a  state  government,  they  should  not  be  unwilling 
to  bear  their  share  of  the  expense.1 

As  the  discussion  proceeded  in  the  convention  several 
practical  proposals  were  made  and  upon  some  of  these 
a  vote  was  taken.  These  proposals  may  be  stated  briefly 
as  follows: 

1.  Tax  all  mines  and  mining  claims  under  the 
general  property  tax  like  all  other  property  at  its 
market  value.     This  represented  the  view  of  the 
agricultural  delegates  and  of  a  few  others. 

2.  Exempt   mines   and   mining  claims   having   a 
value  less  than  a  fixed  minimum  and  tax  all  others 
under  the  general  property  tax.     This  represented 
a  concession  made  by  some  proponents  of  the  general 
property  tax  to  the  friends  of  the  "poor  prospector." 

3.  Tax  all  property  alike,  but  make  no  specific 
mention  of  mines  in  the  constitution,  since  the  sec- 
tion would  mean  the  same  with  the*  omission,  and  it 
would  not  be  offensive  to  the  mining  interests.    This 
proposal  was  made  by  a  member  from  Storey  County 
where  mining  was  the  dominant  interest,  and  there 
was  some  suspicion  that  it  was  made  with  the  expec- 
tation that  if  it  were  adopted  the  mines  would  be 
exempt,  following  the  custom  of  California  under  a 
similar  constitutional  provision.2 

4.  Exempt  the  mines,  but  tax  the  gross  proceeds. 
The  aim  of  this  proposal  was  to  secure  some  revenue 

'"Now,  these  gentlemen  submit  to  us,  who  represent  the  few  cabbage 
patches  there  are  in  the  Territory,  this  proposition :  'We  will  go  into  a  state 
organization,  provided  you  will  pay  the  expense.'  I  consider  that  as  the  real 
proposition,  divested  of  all  the  talk.  Who  is  it  that  wants  a  greater  number 
of  Judges?  Why,  the  mining  interests."  Mr.  Lockwood  in  Constitutional 
Debates,  p.  355. 

2"I  do  not  want  to  leave  this  question  one  of  doubt  and  uncertainty ;  that 
is,  in  such  a  condition  as  will  be  calculated  to  deceive  the  public  mind.  I 
repeat,  sir,  that  unless  all  property  that  has  a  cash  value  in  the  market  is 
subjected  to  taxation,  unless  we  have  a  government  founded  on  those  immuta- 


THE  SECOND  CONVENTION  29 

from  the  productive  mines,  but  to  exempt  the  non- 
producer — the  "hopes"  of  the  "poor  prospectors'." 

5.  Exempt  the  mine,  but  tax  the  net  proceeds. 
This  represented  a  concession  to  the  producer  who 
might  be  producing  considerable  ore,  but  at  little  or 
no  profit.     It  placed  the  burden  on  the  profitable 
mine. 

6.  And  finally  there  were  a  few  members  of  the 
convention   claiming   to    represent    a    considerable 
following  outside  who  frankly  opposed  all  taxation 
of  mines  on  the  ground  that  such  exemption  was 
good  public  policy  because  the  mines  supported  all 
other  industries.     Most  of  these  members  were  not 
seriously  opposed  to  a  tax  on  the  net  proceeds. 

Among  the  members  of  the  convention  there  was  a 
considerable  number  of  able  lawyers  and  the  debate  was 
carried  on  with  a  high  degree  of  dialectic  skill  and  with 
considerable  knowledge  of  the  procedure  of  taxation  in 
California  and  some  of  the  Eastern  States.  The  mem- 
bers generally  showed  familiarity  with  the  local  economic 
and  financial  conditions.  Sometimes,  following  the  lead 
of  custom,  or  influenced  by  peculiar  conditions  and 
special  interests,  they  built  their  arguments  on  sound 
and  clearly  conceived  principles  of  public  finance, 

ble  principles  of  justice,  equity,  and  right,  I,  for  one,  want  to  be  far  distant 
the  day  when  we  shall  adopt  a  state  government.  That  is  the  issue  which  I 
wish  to  have  presented,  and  I  do  not  want  it  confused  or  mystified  by  lan- 
guage which  may  be  susceptible  of  different  constructions.  I  will  not  con- 
sent, by  the  adoption  of  the  language  of  the  California  constitution,  and  the 
consequent  precedent  afforded  by  the  example  of  that  State,  to  appease  the 
consciences  of  gentlemen  who  shall  be  sent  here  as  members  of  our  Legisla- 
ture, and,  with  uplifted  hands,  swear  before  Almighty  God  to  support  the 
constitution.  I  do  not  wish  to  adopt  such  language  that  they  may  feel  justi- 
fied, after  taking  that  oath,  in  turning  around  and  palpably  violating  the 
express  provision  of  the  instrument  they  have  sworn  to  support,  because, 
forsooth,  the  action  of  California,  under  a  similar  constitutional  provision, 
has,  for  fourteen  years,  been  of  the  same  character."  Mr.  Johnson  in  Con- 
stitutional Debates,  p.  319. 


30  TAXATION  IN  NEVADA 

although  there  is  no  evidence  of  any  previous  systematic 
study  of  this  subject  by  any  of  the  members.  In  other 
cases  there  was  an  approach  to  sound  doctrine  in  state- 
ments which  lacked  the  qualifications  and  limitations 
necessary  to  their  full  acceptance,  while  in  still  other 
cases  theories  of  no  validity  were  advanced  with  the 
utmost  assurance  and  without  contradiction  on  the  floor 
of  the  convention. 

The  advocates  of  the  general  property  tax  with  mines 
included  made  no  effort  to  show  that  such  a  tax  is  just, 
either  by  reference  to  fundamental  principles  or  to 
existing  conditions.  Its  justice  appeared  to  be  self  evi- 
dent.1 Their  task  as  they  conceived  it  was  not  to  prove 
the  merits  of  their  contention,  but  to  expose  the  subter- 
fuges of  the  opposition.  Nor  did  the  opposition  directly 
attack  the  theory  of  the  general  property  tax.  That  all 
property  save  mines  should  be  taxed  under  the  provisions 

'"The  first  proposition  I  lay  down — and  I  shall  endeavor  to  confine  myself 
to  three  propositions — is  that  all  species  of  property  are  equally  subject  to 
taxation,  and  that  the  failure  of  any  body  politic  to  make  each  and  every 
species  of  property  a  subject  of  taxation  has  the  effect  to  create  privileged 
classes — a  species  of  legislation  which  is  entirely  at  variance  with  the  spirit 
of  our  institutions.  The  proposition  itself,  stated  in  plain  terms,  is  one  so 
self-evident  that  it  seems  almost  a  work  of  supererogation  to  attempt  to  dilate 
upon  it.  Now,  sir,  it  is  contended  in  direct  terms  by  some  of  the  gentlemen  on 
the  other  side  of  the  question  that  the  mines  are  not  properly  subjects  of  tax- 
ation. I  am  as  well  aware  as  any  gentleman  in  the  convention  that  such  has 
been  the  general  view  of  the  question  ever  since  the  mines  became  so 
important  a  feature  in  the  resources  of  our  country,  especially  upon  the 
Pacific  Slope.  But  I  have  listened  attentively  to  and  read  carefully  the 
immense  number  of  arguments  which  have  been  advanced  to  sustain  that 
proposition,  and  nothing  I  have  ever  yet  heard  or  ever  yet  read  has  tended  to 
change  my  views  on  the  subject  or  convince  me  that  it  is  not  the  duty  of  the 
law-making  power  to  compel  that  particular  species  of  property  to  contribute 
to  the  support  of  the  Government  as  much  as  it  is  to  compel  the  house,  the 
ranch,  the  ox,  the  horse,  the  ass,  or  any  other  species  of  property  to  con- 
tribute to  the  support  of  that  Government.  *  *  *  I  shall  content  myself 
*  *  *  with  simply  asserting  that  proposition,  leaving  any  one  who  may 
come  after  me  to  refute  it  if  he  can."  Mr.  Hawley  in  Constitutional  Debates, 
p.  337. 


THE  SECOND  CONVENTION  31 

of  a  general  property  tax  was  conceded  by  all.  Indeed, 
there  is  no  evidence  that  any  one  even  thought  of  any 
other  plan.  If  there  is  any  one  thing  upon  which  stu- 
dents of  public  finance  are  agreed  today  it  is  that  the 
general  property  tax  is  bad  in  many  respects  in  principle 
and  in  practise,  but  it  was  not  under  general  criticism  in 
1864.  The  position  of  the  mining  interests  was  that 
there  should  be  an  exception  to  the  rule  in  the  case  of 
mines  on  account  of  peculiar  conditions. 

At  various  points  in  the  argument  allusion  is  made  to 
the  fact  that  other  industries  were  supported  by  the 
mines  and  in  one  place  the  notion  that  taxes  on  property 
in  general  were  shifted  to  the  mines  was  set  forth 
definitely.1  This  is  offered  as  a  reason  for  exempting 
mines  from  the  operation  of  the  general  property  tax,  the 
speaker  favoring  a  tax  on  the  net  proceeds  which  would 
be  less  burdensome.  The  counter  argument  did  not 
either  admit  or  deny  the  shifting  of  taxes  to  the  mines, 
but  maintained  that  if  the  miners  paid  the  taxes  as 
claimed,  they  might  as  well  pay  them  directly.2 

'"He  maintains  that  the  mines  are  not  taxed  now,  and  I  say  that  they 
are  taxed  in  every  way.  Suppose  the  case  of  a  merchant  who  sells  goods  to 
the  miner — what  does  he  charge  ?  Why,  a  profit  above  the  cost.  But  what 
is  the  cost?  It  is  not  merely  what  he  gave  for  the  goods,  what  he  paid  for 
the  freight,  the  rent  of  his  building,  and  his  own  profit  alone  ;  but  he  puts 
in  also  the  taxes.  *  *  *  So  it  is  with  the  agriculturalist.  He  raises  a  barrel 
of  cereals  and  sells  it  in  the  market  and,  in  fixing  the  price,  he  puts  on  what- 
ever it  cost  him  in  every  way,  and  among  other  items  is  his  taxes.*  *  * 
You  are  taxed,  but  you  get  it  back  from  the  miners,  and  you  will  continue  to 
do  so.  *  *  *  But  for  the  mines,  all  your  stores  would  be  removed,  your 
farms  would  dry  up  and  be  abandoned,  and  your  wagons  would  stop  in  the 
streets  or  be  turned  elsewhere.  Every  man  you  see  *  *  *  looks  directly 
to  the  miner.  *  *  *  Every  one  charges,  in  the  disposal  of  his  wares  and 
goods,  sufficient  to  cover  his  taxes.  *  *  *  He  makes  the  price  large 
enough  so  that  the  miner  shall  pay  it  back  to  him."  De  Long  in  Constitu- 
tional Debates,  p.  335. 

2"It  seems  to  me  that  gentlemen  are  not  consistent  in  regard  to  it.  In 
one  part  of  their  argument  they  say  that  the  mines  pay  for  everything — that 


32  TAXATION  IN  NEVADA 

In  spite  of  the  expressed  desire  of  many  of  the  mem- 
bers to  have  the  clause  relative  to  the  taxation  of  mines 
perfectly  clear  and  definite,  and  so  that  no  important 
discretion  would  rest  with  the  Legislature,  there  were 
at  least  three  important  questions  left  to  be  settled  by 
legislative  action  or  judicial  procedure:  (1)  Should  the 
taxation  of  mines  be  based  upon  net  or  upon  gross  pro- 
ceeds? (2)  Should  the  rate  upon  proceeds  be  the  same 
as  the  general  property  tax  rate?  (3)  Should  the  pro- 
ceeds of  mines  be  taxed  at  a  uniform  rate  or  could  the 
Legislature  establish  a  graduated  rate  according  to  the 
profitableness  of  the  mine  ? 

The  first  of  these  questions  was  debated  at  consider- 
able length,  but  the  debate  served  to  confuse  rather  than 
to  clarify  the  thought  of  the  convention.  In  1863  a 
territorial  tax  had  been  levied  on  the  "gross  proceeds  of 
mines."1  Apparently  this  term  was  commonly  under- 
stood to  include  the  total  value  of  bullion  recovered  from 
the  ores,  but  an  opinion  of  the  District  Attorney  of 
Storey  County  held  that  the  gross  proceeds  included  only 
the  value  of  the  untreated  ore  at  the  mouth  of  the  mine. 
This  decision  reduced  the  value  of  "gross  proceeds"  in 
Storey  County  by  about  sixty  per  cent  for  1863. 

Apparently  it  was  the  desire  of  a  considerable  number 
of  members,  chiefly  from  the  farming  districts,  when  it 
was  certain  that  only  the  proceeds  were  to  be  taxed,  to 
make  sure  the  tax  should  be  collected  on  the  entire  pro- 

if  a  man  raises  a  cabbage,  the  miner  pays  for  it  and  pays  all  his  taxes,  too — 
that  ultimately  everything  conies  out  of  the  miner.  Then  what  is  the  objec- 
tion to  directly  taxing  the  mines?  *  *  *  What  is  the  difference?  I  do 
not  know  why  it  is  objected  to  unless  there  is  some  'gum-game'  about  it — 
unless  men  are  to  have  wool  pulled  over  their  eyes."  Mr.  Nourse  in  Consti- 
tutional Debates,  p.  372. 

'See  under  heading  "Taxation  of  Mines  in  the  Territory,"  in  Chapter  IV. 


THE  SECOND  CONVENTION  33 

duction,  on  the  value  of  the  bullion  .produced.  This 
view  had  the  support  of  some  of  the  members  from  the 
mining  counties — possibly  enough  to  have  made  a  major- 
ity had  they  been  able  to  get  around  certain  difficulties 
in  terminology.1  "Gross  proceeds"  was  unsatisfactory  on 
account  of  the  opinion  previously  mentioned.  "Bullion," 
favored  at  one  time,  lost  favor  with  some  because  it  was 
represented  that  this  would  have  the  effect  of  exempting 
some  of  the  very  rich  ores  which  were  shipped  out  of  the 
State  for  reduction. 

At  this  point  it  was  cleverly  argued  that  the  use  of 
the  word  "proceeds"  without  qualification  would  give  the 
Legislature  power  to  tax  the  entire  product,  and  that 
the  Legislature  would  be  sure  to  do  this  in  order  to 
secure  sufficient  revenues.2  This  view  appeared  to  win 

'"I  would  ask  if  the  convention  cannot  be  induced  to  insert  the  word 
'gross'  in  this  article,  before  the  word  'proceeds.'  It  is  all  so  very  vague  now 
that  it  ought  not  to  be  satisfactory  to  either  side  of  the  house.  I  think  that 
gentlemen  representing  the  mining  interests  ought  to  extend  that  courtesy, 
at  least,  to  us  who  feel  deeply  wounded  in  the  matter.  Money  will  be  used 
in  the  Legislature  and  we  all  know  for  a  certainty  that  it  would  be  possible 
to  convince  the  Legislature  that  only  the  net  proceeds  are  intended  here.  We 
all  know  what  a  corrupt  body  a  Legislature  may  be  made  by  use  of  money,  and 
a  sufficient  amount  of  money  used  for  the  purpose  may  suffice  to  make  them 
believe  that  the  article  means  net  proceeds,  or  gross  proceeds,  or  whatever 
proceeds  men  may  choose  to  construe  it  to  mean.  And  in  my  opinion  there 
is  not  a  possibility,  under  that  provision,  of  getting  a  dollar  of  revenue  from 
that  source."  Mr.  Haines  in  Constitutional  Debates,  p.  500. 

2"The  way  the  language  reads  is,  that  the  proceeds  of  the  mines  shall  be 
taxed.  Now,  what  are  the  proceeds  of  a  mine  ?  That  term  is  general  and 
broad,  and,  in  my  opinion,  it  embraces  anything  and  everything  that  proceeds 
from  a  mine  and  is  valuable.  And  you  will  find  that  the  Legislature  will  tax 
everything  of  that  kind.  I  ask  gentlemen  if  they  do  not  know  that  to  be  the 
fact.  Do  they  not  know  that  everything  which  issues  from  or  comes  out  of 
a  mine  *  *  *  your  Legislature  will  tax  under  that  clause  as  it  now 
stands  ?  It  may  be  bullion,  it  may  be  ore  which  is  sent  out  of  the  State  ;  it 
may  *be  first-class  ore,  or  second-,  third-,  fourth-,  or  fifth-class  ore ;  but  what- 
ever it  is,  under  that  class  it  must  be  taxed.  *  *  *  I  have  the  best  reasons 
in  the  world  for  knowing  that  such  will  be  the  case,  and  one  of  my  reasons  is 
that  the  very  life  of  the  Legislature,  or,  at  least,  their  bread  and  butter  will 
depend  upon  it."  Mr.  Frizell  in  Constitutional  Debates,  p.  518. 


34  TAXATION  IN  NEVADA 

over  some  of  the  confused  advocates  of  a  gross-proceeds 
tax,  and  on  the  vote  the  "gross-proceeds"  advocates  lost. 

On  the  other  hand  there  were  a  few  members  who 
desired  to  make  a  definite  provision  for  the  taxation  of 
net  proceeds  only.1  They  believed  that  it  was  unjust 
to  tax  gross  proceeds,  and  they  appeared  to  believe  that 
in  the  absence  of  a  constitutional  limitation  the  Legisla- 
ture would  put  the  tax  on  the  gross  proceeds.  In  the  end, 
however,  these  members  were  content  to  support  the 
clause  providing  for  the  taxation  of  proceeds,  and  to 
leave  the  controversy  to  be  settled  by  the  Legislature. 

A  further  reason  for  this  course  lay  in  a  desire  to 
avoid  further  controversy  in  the  convention  and  in  the 
subsequent  campaign  on  the  adoption  of  the  constitu- 
tion. With  the  constitution  fixing  the  tax  on  the  "pro- 
ceeds" each  side  was  able  to  hope  that  the  Legislature 
would  accept  its  interpretation.  Not  very  much  atten- 
tion was  given  to  the  question  of  the  rate  of  taxation  on 
the  proceeds — whether  it  should  be  the  same  as  the  rate 
of  the  property  tax  or  whether  it  might  be  higher  or 
lower — but  at  least  three  members  of  the  convention 

'"Then  again,  if  you  are  to  tax  the  mines  on  their  production,  I  say  the 
fairest  way  will  be  to  tax  them,  not  on  the  gross  proceeds,  but  on  the  net 
proceeds.  Here  is  a  mine  from  which  they  are  taking  out  bullion  to  the  tune 
of  say  forty,  fifty,  sixty,  or  perhaps  a  hundred  thousand  a  week,  and  every 
dollar  they  take  out,  inspired  by  the  hope  of  better  times  coming:,  costs  them 
perhaps  one  dollar  and  ten  cents.  But,  on  the  other  hand,  here  is  another 
mine,  side  by  side  with  that,  and  every  dollar  taken  out  of  the  sepond  mine 
costs  the  owners  only  six  bits.  And  yet  both  would  be  charged  the  same  under 
this  taxation  of  the  gross  proceeds.  I  ask  if  that  is  dealing  justly  by  the 
miners.  It  seems  to  me  not.  The  fairer  way  would  be  to  tax  the  net  proceeds." 
Mr.  Collins  in  Constitutional  Debates,  p.  417. 

"A  provision  for  a  tax  upon  the  proceeds  of  mines  without  even  the  words 
'net  proceeds'  incorporated  in  it  is  an  outrage."  Mr.  Tozer  in  Constitutional 
Debates,  p.  418. 


THE  SECOND  CONVENTION  35 

declared  it  to  be  their  understanding  that  the  article  as 
adopted  did  not  require  the  rate  to  be  the  same,  and  no 
member  argued  for  the  other  interpretation.1 

One  gentleman  advanced  the  idea  that,  since  the 
proceeds  alone  were  taxable,  the  provision  for  equality 
demanded  that  the  rate  be  higher  than  the  rate  on  prop- 
erty, and  he  introduced  an  amendment  to  make  this 
definite,  but  the  amendment  was  defeated,  some  of  the 
members  giving  as  their  reason  for  voting  against  it 
their  belief  that  the  Legislature  would  have  the  power  to 
establish  a  different  rate  without  a  specific  grant  in  the 
constitution.  When,  however,  the  Legislature,  acting 
upon  this  interpretation,  in  1865  fixed  the  rate  of  tax 
upon  the  proceeds  of  mines  at  a  rate  much  lower  than 
the  rate  on  property,  the  Supreme  Court  decided  that 
this  was  unconstitutional,  that  it  was  the  intent  of  the 
constitution  to  tax  property  and  the  net  proceeds  at  the 
same  rate.2 

On  the  final  vote  in  the  convention  on  the  adoption  of 
Article  X,  it  was  supported  by  the  delegates  represent- 
ing the  mining  counties  and  opposed,  in  the  main,  by  the 
representatives  of  the  agricultural  districts.  When  sub- 
mitted to  the  people  the  constitution  as  a  whole  was 
adopted  by  a  large  majority,  even  the  agricultural  coun- 
ties voting  in  the  affirmative.  The  argument  that  state- 
hood would  restore  prosperity  through  the  creation  of 
courts  able  to  settle  cases  in  litigation  was  effective  with 
farmers  as  well  as  with  miners. 

'See  Constitutional  Debates,  pp.  443-444  and  520. 
rSee  discussion  of  this  decision,  Chapter  IV. 


36  TAXATION  IN  NEVADA 

Article  X  of  the  Constitution 
The  Legislature  shall  provide  by  law  for  a 
uniform  and  equal  rate  of  assessment  and  taxa- 
tion, and  shall  prescribe  such  regulations  as 
shall  secure  a  just  valuation  for  taxation  of  all 
property,  real,  personal  or  possessory,1  except 
mines  and  mining  claims,  the  proceeds  of  which 
alone  shall  be  taxed,  and  also  excepting  such 
property  as  may  be  exempted  by  law  for  muni- 
cipal, educational,  literary,  scientific,  religious, 
or  charitable  purposes. 

MINOR  CONSTITUTIONAL  PROVISIONS 
According  to  the  classification  implied  in  the  constitu- 
tion of  Nevada  there  are  three  sources  of  revenue  from 
taxation  required  by  specific  mention  and  others  per- 
mitted by  silence.  A  general  property  tax  with  mines 
excepted,  a  tax  on  the  proceeds  of  mines,  and  a  poll- 
tax  are  required,  and,  in  the  absence  of  any  restriction  to 
the  contrary,  license  taxes  and  other  indirect  taxes  may 
be  levied. 

Unpatented  mines  and  mining  claims  are  constitution- 
ally exempt  from  the  general  property  tax  and  the  Legis- 
lature may  exempt  public  property  and  property  used  for 
educational,  literary,  scientific,  or  charitable  purposes. 
The  Supreme  Court  has  held  that  the.  rule  of  uniformity 

'Ordinarily  the  title  to  the  land  on  which  mines  are  located  is  retained  by 
the  United  States  Government,  the  locator  of  the  mine  owning  not  the  land 
but  a  mining  claim.  There  appeared  to  be  some  doubt  in  the  minds  of  some 
of  the  members  of  the  constitutional  convention  as  to  whether  mining  claims 
were  either  real  estate  or  personal  property.  Hence  the  term  "possessory 
right"  was  introduced  to  make  sure  of  the  inclusion  of  such  claims  for  pur- 
poses of  taxation.  By  later  action  the  convention  exempted  mines  and  min- 
ing claims  from  taxation,  so  that  the  use  of  the  term  has  no  practical 
significance  except  for  unimportant  possessory  rights  to  surface  real  estate 
and  such  rights  could  be  taxed  as  well  under  the  head  of  real  estate. 


MINOR  CONSTITUTIONAL  PROVISIONS  37 

applies  to  the  general  property  tax  and  to  the  tax  on  the 
proceeds  of  mines  and  that  the  rate  on  the  proceeds  of 
mines  must  be  the  same  as  the  rate  on  property.  The 
poll-tax  must  be  not  less  than  two  nor  more  than  four 
dollars  for  each  male  person  between  the  age  of  21  and 
60  years.  The  constitution  makes  no  mention  of  license 
or  other  indirect  tax  and,  in  the  absence  of  any  restric- 
tion, the  Legislature  is  held  to  possess  very  wide  powers, 
being  limited  by  the  "due  process  of  law"  clause  of  the 
state  and  federal  constitutions,  by  certain  federal  con- 
stitutional provisions  relating  to  the  regulations  of  com- 
merce, by  certain  acts  of  Congress,  and  by  certain  broad 
principles  inhering  in  the  nature  of  constitutions.1 

The  following  provisions  relative  to  taxation  are  found 
elsewhere  in  the  constitution  as  originally  adopted : 

1.  Special  or  local  laws  relative  to  the  assessment  and 

collection  of  taxes  are  forbidden.2 

2.  An   animal   tax   sufficient   to   cover  the   estimated 

expense  of  the  State  for  a  fiscal  year  and  to 
pay  any  deficiency  from  preceding  years  must 
be  levied.3 

3.  A  special  tax  of  not  less  than  one-quarter  mill  or 

more  than  one-half  mill  on  the  dollar  was 
required  to  be  levied  for  the  support  of  the 
University  and  the  common  schools.4 

4.  The  property  of  corporations  is  subject  to  taxation 

the  same  as  the  property  of  individuals  except 

'See  Cooley,  The  Law  of  Taxation,  3d  ed.,  vol.  1,  ch.  3. 
^Constitution,  Art.  IV,  Sec.  20. 
^Constitution,  Art.  IX,  Sec.  2. 
'Constitution,  Art.  XI,  Sec.  6. 


38  TAXATION  IN  NEVADA 

that  the  property  of  corporations  formed  for 
municipal,  charitable,  religious,  or  educational 
purposes  may  be  exempted  by  law.1 
5.  When  the  State  creates  a  bonded  debt  it  must,  at 
the  same  time,  provide  for  levying  an  annual 
tax  sufficient  to  pay  the  interest  semiannually, 
and  the  principal  within  twenty  years  from  the 
passage  of  such  law.2 

CONSTITUTIONAL  AMENDMENTS  RELATING  TO  TAXATION 
There  have  been  three  amendments  to  the  constitu- 
tion relative  to  taxation  and  each  amendment  embraced 
at  least  two  changes.  Before  1889  the  constitution 
required  the  levy  of  a  special  school  tax  of  not  less  than 
one-quarter  of  a  mill  nor  more  than  one-half  mill  on  the 
dollar.  The  amendment  ratified  in  1889  required  a  tax 
for  this  purpose  not  to  exceed  two  mills  on  the  dollar. 
The  upper  limit  was  raised  and  the  lower  limit  was 
removed  altogether.3 

In  1906  unworked  patented  mines  were  made  subject 
to  taxation  by  an  amendment.4 

The  original  section  of  the  constitution  providing  for 
a  poll-tax  apportioned  it  half  and  half  to  county  and 
State.  The  amendment  of  1910  devoted  all  of  it  to  road 
purposes  and  left  the  Legislature  free  to  apportion  it 

'Constitution,  Art.  VIII,  Sec.  2. 

^Constitution,  Art.  XI.  Sec.  3. 

Constitution  of  Nevada,  Art.  XI,  Sec.  6. 

4 A  patented  mine  is  a  mine  situated  on  land  for  which  the  United  States 
Government  has  issued  a  patent.  The  title  to  the  land  is  privately  owned. 
Where  a  man  owns  a  mining  claim  on  government  land,  he  must  do  a  cer- 
tain amount  of  mining  or  development  work  each  year  or  the  claim  is  for- 
feited. The  owner  of  a  patented  mine  retains  his  ownership  like  any  other 
owner  of  real  estate  without  reference  to  work.  The  object  of  the  amendment 
is  to  encourage  development  work  by  taxing  the  idle  mine. 


CONSTITUTIONAL  AMENDMENTS  39 

to  county  and  State  as  it  might  choose.  It  also  repealed 
the  clause  permitting  the  Legislature  to  make  the  pay- 
ment of  a  poll-tax  a  condition  to  the  right  of  voting.1 

'Constitution,  Art.  II,  Sec.  7. 

The  Legislature  shall  not  pass  local  or  special  laws  in  any  of  the  follow- 
ing enumerated  cases — that  is  to  say :  *  *  *  for  the  assessment  and  col- 
lection of  taxes  for  state,  county,  and  township  purposes.  Art.  IV,  Sec.  SO. 

The  Legislature  shall  provide  by  law  for  uniform  and  equal  rates  of 
assessment  and  taxation,  and  shall  prescribe  such  regulations  as  shall  secure 
a  just  valuation  for  taxation  of  all  property,  real,  personal  and  possessory, 
except  mines  and  mining  claims,  when  not  patented,  the  proceeds  alone  of 
which  shall  be  assessed  and  taxed,  and  when  patented,  each  patented  mine 
shall  be  assessed  at  not  less  than  five  hundred  dollars  except  when  one  hun- 
dred dollars  in  labor  has  been  actually  performed  on  such  patented  mine  dur- 
ing the  year,  in  addition  to  the  tax  upon  the  net  proceeds,  and  also  except- 
ing such  property  as  may  be  exempted  by  law  for  municipal,  educational, 
literary,  scientific  or  other  charitable  purposes.  Art.  X,  as  amended  in  1906. 

The  Legislature  shall  provide  by  law  for  the  payment  of  an  annual  poll- 
tax,  of  not  less  than  two  nor  exceeding  four  dollars,  from  each  male  person 
resident  in  the  State  between  the  ages  of  twenty-one  and  sixty  years,  uncivi- 
lized American  Indians  exempted,  to  be  expended  for  the  maintenance  and 
betterment  of  the  public  roads.  Art.  II,  Sec.  7,  as  amended  in  1910. 

The  Legislature  shall  provide  a  special  tax,  which  shall  not  exceed  two 
mills  on  the  dollar  of  all  taxable  property  in  the  State  in  addition  to  the 
other  means  provided  for  the  support  and  maintenance  of  said  University 
and  common  schools.  Art.  XI,  Sec.  6,  as  amended  in  1889. 

The  Legislature  shall  provide  by  law  for  an  annual  tax  sufficient  to  defray 
the  estimated  expenses  of  the  State  for  each  fiscal  year  ;  and  whenever  the 
expenses  of  any  year  shall  exceed  the  income,  the  Legislature  shall  provide  for 
levying  a  tax  sufficient,  with  other  sources  of  income,  to  pay  the  deficiency,  as 
well  as  the  estimated  expenses  of  such  ensuing  year  or  two  years.  Art.  IX, 
Sec.  2. 

All  real  property  and  possessory  rights  to  the  same  as  well  as  personal 
property  in  this  State,  belonging  to  corporations  now  existing  or  hereafter 
created,  shall  be  subject  to  taxation  the  same  as  property  of  individuals  ;  pro- 
vided, that  the  property  of  corporations  formed  for  municipal,  charitable, 
religious  or  educational  purposes  may  be  exempted  by  law.  Art.  VIII,  Sec.  2. 

For  the  purpose  of  enabling  the  State  to  transact  its  business  upon  a  cash 
basis  from  its  organization,  the  State  may  contract  public  debts  ;  but  such 
debts  shall  never,  in  the  aggregate,  exclusive  of  interest,  exceed  the  sum  of 
one  per  cent  of  the  assessed  valuation  of  the  State  as  shown  by  the  reports  of 
the  County  Assessors  to  the  State  Controller,  except  for  the  purpose  of  defray- 
ing extraordinary  expenses,  as  hereinafter  mentioned.  Every  such  debt  shall 
be  authorized  by  law  for  some  purpose  or  purposes,  to  be  distinctly  specified 
therein ;  and  every  such  law  shall  provide  for  levying  an  annual  tax  sufficient 
to  pay  the  interest  semiannually,  and  the  principal  within  twenty  years  from 
the  passage  of  such  law,  and  shall  specially  appropriate  the  proceeds  of  said 
taxes  to  the  payment  of  said  principal  and  interest ;  and  such  appropriation 
shall  not  be  repealed,  nor  the  taxes  be  postponed  or  diminished  until  the  prin- 
cipal and  interest  of  said  debts  shall  have  wholly  been  paid.  *  *  *  Art. 
IX,  Sec.  3,  as  amended  in  1916. 


CHAPTER  III 
TAX  ADMINISTRATION 

The  unit  of  local  government  in  Nevada  is  the  county. 
Most  of  the  area  of  the  State  is  not  organized  into  civil 
townships,  and  where  there  is  a  civil  township  it  exists 
for  judicial  purposes  only.  The  Justice  of  the  Peace 
and  the  Constable  are  the  only  township  officers,  and 
these,  in  so  far  as  they  are  not  compensated  by  fees,  are 
paid  out  of  the  county  treasury,  there  being  no  township 
taxes  or  funds.  The  County  Assessor  makes  assessments 
for  state,  county,  city,  and  school  district  taxation.  The 
County  Treasurer  as  tax  collector  collects  state,  county, 
city,  and  school  district  taxes.  The  county  Sheriff  col- 
lects license  taxes  for  state  and  county  purposes  and  to 
some  extent  for  town  and  city  purposes.  This  organiza- 
tion of  financial  administration  stands  out  in  sharp  con- 
trast to  the  system  in  use  where  the  township  is  the  unit 
of  local  administration,  and  it  may  be  regarded  as  an 
adaptation  to  the  conditions  presented  by  a  State  of 
sparse  and  shifting  population.  The  larger  unit  possesses 
a  higher  degree  of  stability  than  would  the  smaller. 

There  are  sixteen  counties  in  Nevada  and  their  aver- 
age area  is  nearly  seven  thousand  square  miles.  Some  of 
the  largest  counties  have  over  sixteen  thousand  square 
miles  each,  or  an  area  over  twice  the  size  of  Massachu- 
setts. For  the  most  part,  the  State  has  a  very  sparse 
population  and  most  of  the  land  is  still  owned  by  the 
National  Government,  much  of  it  being  unsurveyed. 


A8SESSME\T  OF  PROPERTY  41 

The  privately  owned  land,  consisting  of  about  three  and 
a  half  million  acres,  is  found  mainly  along  the  chief 
rivers  and  in  the  mountains  where  the  ownership  of 
springs  and  creeks  gives  control  of  the  grazing  lands. 
Except  in  a  few  valleys  the  land  is  chiefly  owned  in 
large  holdings,  some  of  the  largest  having  over  a  hun- 
dred thousand  acres  each.  The  Central  Pacific  Railway 
Company  still  owns  3,982,786  acres  received  as  a  grant 
for  the  construction  of  the  road. 

THE  ASSESSMENT  OF  PROPERTY 

From  the  standpoint  of  the  development  of  adminis- 
trative agencies  of  taxation,  the  history  of  the  State  may 
be  divided  into  two  periods,  the  second  beginning  in 
1901  when  the  State  Board  of  Assessors  was  created. 
In  the  first  period  the  Legislature,  in  its  efforts  to  pro- 
vide for  uniform  and  equal  assessments  for  purposes  of 
taxation  as  required  by  the  constitution,  relied  wholly 
upon  the  action  of  county  officers  guided  by  general  laws 
and  with  a  system  of  penalties  and  rewards  as  incentives 
to  honest  and  efficient  assessments.  Likewise  dependence 
was  placed  on  penalties  to  secure  from  owners  true  state- 
ments of  their  property.  In  so  far  as  these  penal- 
ties were  enforcible  only  by  the  courts,  we  may  call  this 
the  system  of  judicial  control. 

Beginning  with  the  creation  of  the  State  Board  of 
Assessors  in  1901,  the  tendency  of  legislation  has  been  to 
rely  less  and  less  on  a  system  of  judicial  penalties  and 
more  and  more  upon  central  administrative  agencies. 
Most  of  the  old  laws  of  the  earlier  period  still  remain  on 
the  statute  books,  but  they  are,  in  the  main,  dead-letter 


42  TAXATION  IN  NEVADA 

laws,  while  the  newer  agencies  have  been  effective  in  an 
increasing  measure.  When  this  newer  plan  has  had  time 
to  work  itself  out  more  perfectly  and  when  the  older  laws 
are  repealed  or  amended  in  harmony  with  the  newer 
ideas,  it  may  be  called  the  system  of  administrative 
control. 

ASSESSMENTS  UNDER  JUDICIAL  CONTROL 

It  will  not  be  necessary  to  present  any  detailed 
description  of  the  earlier  system.  A  brief  characteriza- 
tion with  some  reference  to  its  defects  will  be  sufficient. 

The  County  Assessor  is  elected  by  the  people  for  a 
term  of  two  years  and,  subject  to  the  direction  of  the 
Board  of  County  Commissioners  in  authorizing  the 
expenditure  for  salaries,  he  may  appoint  one  or  more 
deputies  for  a  period  not  to  exceed  six  months.  He  is 
by  law  required  to  make  diligent  inquiry,  to  ascertain 
all  property,  to  determine  the  true  cash  value,  and  to 
list  and  assess  the  property  to  the  owners.  He  is 
required  to  demand  of  owners  itemized  and  sworn  state- 
ments of  their  property,  but  he  is  not  bound  to  accept 
such  statements  as  true,  but  must  assess  according  to  his 
judgment. 

The  law  provides  for  penalties  in  abundance.  It  is 
full  of  teeth — sharp  teeth,  too.  If  an  Assessor  or  deputy 
is  guilty  of  neglect  of  any  duty  enjoined  by  law,  he  is 
subject  to  indictment  and  a  fine  of  five  hundred  dollars. 
He  is  liable  on  his  bond  for  the  taxes  on  any  property 
unassessed  through  wilful  or  inexcusable  neglect,  and 
it  is  made  the  specific  duty  of  the  County  Auditor, 
County  Treasurer,  and  the  District  Attorney  to  cause 
this  law  to  be  enforced.  For  the  property  holder  there 


ASSESSMENTS  UNDER  JUDICIAL  CONTROL         43 

are  penalties  for  failure  to  make  a  statement,  and  for 
false  statements  he  is  subject  to  a  fine,  imprisonment, 
and  double  taxation.  It  is  made  the  specific  duty  of  the 
Assessor  to  enforce  these  penalties  by  appropriate  pro- 
cedure. 

The  first  impression  one  receives  on  reading  the  list 
of  penalties  is  that  it  would  be  extremely  unsafe  for 
any  Assessor  to  be  negligent  or  for  any  owner  of  prop- 
erty to  try  to  evade  any  of  his  lawful  taxes.  In  fact,  one 
would  appear  to  be  taking  a  great  hazard  in  accepting 
the  office  of  Assessor,  so  strict  are  the  requirements  and 
so  heavy  the  penalties  for  failure.  A  little  familiarity 
with  the  practical  working  of  the  system,  however,  leads 
to  a  modification  of  these  hasty  opinions.  Many  people 
have  failed  to  make  the  statement  required,  and  the 
writer  has  never  heard  of  a  case  of  any  such  person  being 
punished  as  required  by  law,  but,  on  the  contrary,  such 
persons  frequently  escape  taxation  in  whole  or  in  part 
on  account  of  such  failure.1  Nor  are  the  statements, 

'The  following  incident  illustrates  the  point :  The  Assessor  met  a  land 
owner  and  stockman  on  the  street  and  invited  him  to  call  at  the  office  and 
make  out  a  statement.  The  stockman  said  he  was  busy  and  invited  the  Asses- 
sor to  come  to  the  ranch  and  assess  the  property.  A  second  time  invitations 
were  extended  and  not  accepted  by  either.  Finally  the  Assessor  did  what  the 
stockman  expected  him  to  do — he  copied  down  the  assessment  of  the  previous 
year.  The  stockman  in  relating  the  incident  to  a  friend  said  that  he  had 
saved  taxes  on  ten  or  twelve  hundred  head  of  cattle  by  his  failure  to  furnish 
the  statement. 

This  account  of  how  an  assessment  was  made  without  a  statement  was 
given  me  confidentially  by  a  merchant  several  years  ago.  The  language  is,  as 
nearly  as  I  can  recall,  in  the  words  of  the  merchant:  "The  Assessor  now 
assesses  my  stock  at  $5,000.  It  was  only  $500  for  a  long  time,  but  one  year  a 
new  Assessor  just  raised  it  to  $5,000  and  I  made  no  complaint.  You  see  it 
was  like  this :  The  Assessor  would  come  around  and  sit  down  and  we  would 
visit  a  while.  Then  he  would  ask  me  what  my  stock  was  worth.  I  would  say 
that  I  did  not  know  exactly — that  he  could  see  it  himself ;  that  he  'could  make 
his  own  estimate.  He  would  say  'Well,  how  would  $500  do?'  I  would  say 
'That  suits  me,'  and  he  would  put  it  down  at  that.  The  actual  value  of  the 
stock  is  about  one  hundred  and  six  thousand  dollars." 


44  7M  V  1770.V    l\   \KVADA 

when  made,  generally  correct.  There  are  certain  sorts  of 
property  such  as  money,  stocks,  bonds,  bank  deposits, 
notes,  and  credits  which  are  almost  never  listed,  and  who 
has  ever  heard  of  any  of  these  people  being  indicted  or 
punished  for  perjury  ?  In  other  cases  the  count  has  been 
rather  inaccurate,  sometimes  even  land  being  omitted 
or  the  amount  understated.  The  number  of  sheep  and 
cattle  returned  to  the  Assessors  has  been  much  too  low. 
The  same  is  true  of  other  classes  of  property.  In  fact, 
as  one  becomes  familiar  with  customs  of  laxity  which 
have  persisted  for  long  periods  everywhere  in  the  State, 
he  wonders  if,  after  all,  the  penalties  are  not  rather 
innocuous — if  the  sharp  teeth  of  the  law  do  not  belong 
to  a  harmless  cast-iron  watch-dog. 

In  the  earlier  period  there  was  much  reliance  on 
rewards  for  the  faithful  performance  of  duty  on  the 
part  of  the  Assessor  and  the  license  collector.  Before 
1885  the  Assessor  was  entitled  to  a  commission  of  ten 
per  cent  on  all  poll-taxes  collected  by  him  and  a  com- 
mission of  from  two  to  six  per  cent  on  the  personal  prop- 
erty taxes  collected  by  him — the  personal  taxes  of  persons 
owning  no  real  estate.  He  was  further  entitled  to  three  per 
cent  of  all  tax  on  the  proceeds  of  mines.  More  recently 
the  Sheriff  as  license  collector  is  entitled  to  six  per  cent 
on  all  license  taxes  collected  by  him.  The  Assessor  as 
collector  of  the  sheep  license  tax  receives  twenty  per 
cent  of  all  such  tax.  Doubtless  these  commissions  were 
intended  to  serve  as  an  incentive  to  efficiency.  The  com- 
missions were  large,  particularly  in  the  more  populous 
mining  counties.  Possibly  the  rewards  were  in  a  measure 
effective,  but  when  we  see  Sheriffs  going  on  year  after 


A88K88MEXT8  L"XDER  JUDICIAL  CONTROL         45 

year  accepting  a  license  tax  less  than  a  quarter  of  what 
the  law  requires,  and  when  we  learn  that  a  large  pro- 
portion of  men  escape  their  poll-tax,  we  lose  faith  in  the 
system  of  rewards. 

The  fact  is  that  the  whole  system  of  motives — of  penal- 
ties and  rewards  for  Assessor  and  Sheriff — does  not  seem 
to  be  based  on  any  clear  comprehension  of  human  nature, 
or  at  least  it  ignores  some  important  social  influences. 
The  rewards  and  penalties  are  too  individualistic,  too 
simple  to  fit  the  situation.  They  appeal  to  the  selfishness 
of  men  in  a  manner  quite  to  the  heart  of  the  narrowest 
classical  economist  who  so  overemphasized  the  role  of 
the  little  selfish  motives  among  men.  Strangely  enough 
we  sometimes  find  the  law  appealing  to  a  motive  so  small 
and -selfish  that  the  average  Assessor  would  be  ashamed 
to  acknowledge  its  influence,  even  to  himself,  while  the 
larger  social  motive  in  some  instances  is  on  the  side  of 
evasion  of  law.1  On  the  whole,  the  old  idea  of  securing 
efficiency -in  assessments  through  appealing  to  the  per- 
sonal selfishness  or  to  the  fear  of  the  Assessors  through 
statutory  rewards  and  punishments  to  be  inflicted  by 
judicial  procedure  has  broken  down  in  practise  and  it  is 
not  correct  in  its  theory.  Any  man  who  can  be  elected  as 
Assessor  is  a  man  who  is  governed  by  the  ideas  of  his 
community  as  to  what  ought  to  be  done.  He  must  do 
what  the  effective  moral  forces  of  the  community 
demand  should  be  done,  not  what  his  pecuniary  interest 
as  receiver  of  commissions  demands  or  what  the  penalties 

'For  example,  a  former  law  in  regard  to  the  taxation  of  state  banks  was 
of  such  a  character  that  the  Assessor  was  obliged  to  recognize  that  non- 
enforcement  was  not  only  in  the  interest  of  justice  to  the  banks,  but  that  it 
was  in  the  interest  of  the  business  community  in  general. 


46  TAXATION  IN  NEVADA 

of  the  law  may  seek  to  enforce.  The  fact  that  some  laws 
have  been  really  bad  has  justified  the  Assessor  in  his 
own  eyes  and  in  the  eyes  of  the  community  in  winking  at 
their  evasion. 

Still  another  error  common  in  the  thought  of  the 
recent  past  was  expressed  in  a  public  address  by  a  promi- 
nent citizen.  It  was  his  view  that  the  trouble  lay  in  the 
character  of  the  men  chosen  to  be  Assessors.  He  wanted 
a  man  who  was  an  expert  in  the  judgment  of  values,  a 
sleuth  in  the  discovery  of  property,  a  man  of  "unim- 
peachable integrity,"  a  man  with  "no  political  affilia- 
tions, ambitions,  hopes  or  fears,  a  man  with  no  friends 
to  favor,  no  enemies  to  punish,  a  man  who  would  assess 
each  piece  of  property  at  its  true  cash  value."  "Give  us 
such  men  as  Assessors  and  we  will  get  equal  assessments 
under  the  present  law." 

There  are  several  difficulties  in  this  view.  In  the  first 
place  it  is  doubtful  whether  there  are  any  such  paragons  of 
virtue  and  wisdom.  Even  if  there  are  a  few,  they  would 
not  be  wanted  as  Assessors  and  they  should  not  be  made 
Assessors,  since  society  would  have  more  important  uses 
for  them.  Moreover,  if  by  some  accident  one  such  perfect 
individual  should  be  made  Assessor,  it  is  certain  that  the 
strict  enforcement  of  statutes  which  have  been  treated 
as  dead-letter  laws  for  long  years,  and  the  strict  enforce- 
ment of  good  laws  in  some  counties,  while  laxity  con- 
tinued in  others,  would  work  even  greater  inequality 
and  injustice  than  exists  at  present. 

On  the  whole,  our  Assessors  are  not  a  bad  lot.  They 
are  as  good  as  their  average  critic.  They  possess  and 
deserve  to  possess  in  reasonable  degree  the  respect  of 


ASSESSMENTS  UNDER  JUDICIAL  CONTROL         47 

their  communities.  They  are,  as  a  rule,  trying  to  do 
the  right  thing  as  they  see  it,  and  very  often,  by  reason 
of  their  closer  touch  with  the  practical  side  of  taxation, 
they  see  the  situation  more  accurately  in  detail  than  do 
the  makers  of  our  constitution  and  laws.  This  is  not  to 
say  that  Assessors  make  no  mistakes.  They  do  make 
mistakes,  sometimes  big  mistakes,  but  the  mistakes  are 
not  to  be  charged  so  much  to  the  particular  Jones,  Brown, 
and  Smith  who  are  the  Assessors  of  today  as  to  the 
system  under  which  they  work.  It  is  certain  that  their 
predecessors  made  the  same  mistakes,  and  doubtless  the 
same  mistakes  will  continue  to  be  made  if  the  work  is 
done  under  the  same  system.  If  we  have  the  right 
system,  we  can  get  much  better  results  with  the  kind  of 
men  there  are  in  the  world. 

The  practical  outcome  of  assessment  by  local  County 
Assessors  as  equalized  by  County  Boards  of  Equalization 
without  any  agency  for  centralized  administrative  con- 
trol was :  ( 1 )  great  general  undervaluation ;  ( 2 )  great 
lack  of  uniformity  as  between  counties  and  as  between 
persons  in  the  same  county.1  Each  Assessor,  believing 
that  the  others  would  undervalue  property,  felt  that 
he  must  do  it  likewise  in  order  to  prevent  his  county 
from  paying  an  unfairly  large  portion  of  the  state 
tax,  this  tax  being  proportioned  to  the  assessed  valu- 
ation of  the  various  counties.  Moreover,  the  Asses- 

]The  following  case  may  be  taken  as  representing  an  extreme  of  tax 
evasion  through  undervaluation.  The  writer  in  the  autumn  of  1908  talked 
with  a  land  owner  in  a  certain  county  relative  to  the  value  of  his  property. 
The  land  owner  was  offering  certain  land  for  sale  at  $75  per  acre  and  he 
maintained  with  the  manner  of  conviction  that  it  was  fully  worth  the  price. 
I  found  that  the  land  was  assessed  at  25  cents  an  acre  or  one-third  of  one 
per  cent  of  the  value  claimed.  There  was  other  property  in  this  county 
assessed  at  least  twelve  or  fifteen  per  cent  of  its  value. 


48  7M.V.I770.V  IN  NEVADA 

sors  ordinarily  lacked  the  information  essential  to  the 
accurate  assessment  of  public  utilities,  and  in  order  to 
secure  such  information  there  was  need  for  more  legal 
authority  and  more  expert  ability.  The  small  taxpayer, 
not  having  so  much  at  stake,  did  not  take  the  trouble  to 
protest  for  equal  assessments  and  so  usually  was  assessed 
on  a  much  higher  valuation  than  the  big  interests.  Large 
counties  with  a  considerable  mileage  of  railroads  and 
other  public  utilities  were  able  to  secure  sufficient  local 
revenue  on  the  basis  of  very  low  valuation,  while  coun- 
ties with  little  property  were  obliged  to  assess  at  higher 
valuations  in  order  to  secure  sufficient  revenue  for  county 
and  school  purposes. 

ASSESSMENTS  UNDER  ADMINISTRATIVE  CONTROL 
The  first  abortive  effort  to  centralize  authority  in 
assessing  was  made  in  1891,  when  the  Legislature  pro- 
vided for  a  State  Board  of  Assessors  and  Equalization 
with  broad  powers — power  to  assess  railroads,  power  to 
raise  all  assessments  by  counties  horizontally;  also 
power  to  raise  the  value  of  any  specific  class  or  parcel  of 
property.1  This  board  consisted  of  the  Governor,  the 
Attorney-General,  and  the  State  Treasurer.  Through 
the  action  of  this  agency  there  was  a  pretty  marked 
increase  in  the  total  valuations  for  1891  and  1892. 
Apparently  the  board  tried  in  good  faith  to  make  valu- 
ations correspond  more  nearly  to  actual  values  and  to 
secure  greater  uniformity.  It  appears  probable,  too, 
that  it  was  measurably  successful.  It  is  not  improbable 
that  the  board  made  some  mistakes — particularly  in  the 

'Statutes  of  Nevada,  1891,  p.  56. 


ADMINISTRATIVE  CONTROL  OF  ASSESSMENTS    49 

horizontal  raise  by  counties,  since  some  of  the  property 
had  been  assessed  high  enough  originally.  From  the 
standpoint  of  administrative  organization  the  chief 
defect  of  this  plan  was  that  a  very  important  responsi- 
bility was  placed  in  the  hands  of  three  men  whose 
time  was  mainly  demanded  by  other  duties  and  who 
were  given  no  adequate  means  for  ascertaining  the 
facts  necessary  to  a  correct  judgment.  They  were 
obliged  to  act  on  partial  information  and  on  certain 
assumptions  which  may  not  have  been  correct.  Partly 
as  a  result  of  its  mistakes,  but  perhaps  more  largely 
because  of  its  efforts  in  the  direction  of  efficiency  which 
had  aroused  the  opposition  of  certain  large  taxpayers,  the 
board  was  abolished  after  an  existence  of  two  years. 
Needless  to  say,  valuations  fell  immediately  to  the  lower 
figures  previously  prevailing. 

A  second  and  more  sustained  and  successful  move- 
ment in  the  direction  of  centralized  control  of  assess- 
ments began  in  1901  with  the  creation  of  a  body  known 
as  the  State  Board  of  Assessors.1  This  body  consisted  of 
the  County  Assessors  who  met  annually  to  establish  valu- 
ations on  such  property  as  in  their  judgment  they  were 
able  to  value  more  uniformly  when  acting  collectively 
than  when  acting  individually.  The  Governor  of  the 
State  presided  at  these  meetings  and  had  a  casting  vote 
in  case  of  a  tie.  This  board  in  1901  established  the 
value  of  range  live  stock  and  of  railroads.2  In  1903 

'Statutes  of  Nevada,  1901,  p.  61. 

2The  action  of  the  board  in  1901  in  fixing  the  mile  value  of  the  various  rail- 
roads by  specific  mention  was  declared  illegal  by  the  Federal  District  Court  on 
the  ground  that  the  board  had  not  classified  the  property  before  fixing  the 
valuations.  (Ill  Fed.  71.)  In  the  following  year  the  board  proceeded  to 
classify  the  roads  so  that  there  was  one  road  in  each  class. 


50  TAXATION  IN  NEVADA 

the  law  was  amended  in  such  a  way  as  to  make  it  the 
duty  of  the  State  Board  of  Assessors  to  establish  the 
value  of  (1)  all  railroads  including  rolling  stock;  (2)  all 
telegraph  and  telephone  lines;  (3)  all  electric  light  and 
power  lines;  (4)  all  cattle  and  sheep;  and  (5)  all  other 
kinds  of  property  which,  in  the  judgment  of  the  board, 
it  could  value  more  uniformly  than  could  the  Assessors 
acting  separately.1  From  1901  to  1909,  inclusive,  the 
board  met  annually  and  fixed  the  value  of  railroads,  of 
cattle,  of  sheep,  and  of  certain  other  sorts  of  live  stock. 
In  spite  of  the  mandatory  character  of  the  law  in  rela- 
tion to  telegraph  and  telephone"  lines  and  electric  light 
and  power  lines,  the  board  failed  to  fix  the  value  of  such 
property.  The  meeting  of  1910  was  notable  because  of 
Governor  Dickerson's  efforts  to  get  higher  valuations 
for  the  railroads  and  to  secure  action  establishing  valu- 
ations for  the  property  of  public-service  corporations 
generally  and  especially  for  those  mentioned  in  the  law. 
The  position  of  the  Governor  was  that  the  law  was  man- 
datory and  he  was  supported  in  this  view  by  legal 
counsel.  The  majority  of  the  Assessors  held  that  they 
did  not  possess  the  information  necessary  to  enable  them 
to  make  just  classifications  and  valuations  of  such  prop- 
erty and,  hence,  that  it  would  be  better  to  leave  such 
assessments  to  the  various  Assessors  who  could  secure 
further  information  each  for  his  own  county. 

To  supply  this  lacking  data  the  Governor  proposed 
that  the  board  should  make  use  of  information  in  the 
hands  of  the  State  Railroad  Commission.  A  tabulated 
statement  with  considerable  data  relative  to  the  value, 

'Statutes  of  Nevada,  1903,  p.  95. 


ADMINISTRATIVE  CONTROL  OF  ASSESSMENTS     51 

not  only  of  railroads,  but  of  other  public  utilities,  was 
submitted  by  the  commission.  Now  the  Railroad  Com- 
mission, which  had  been  created  in  1907,  had  been  secur- 
ing data  relative  to  valuations  in  the  interest  of  rate 
regulation.  To  this  work  it  brought  more  expert  ability 
and  it  had  the  support  of  more  adequate  laws,  and  its 
information  along  certain  lines  was  far  more  complete 
than  the  Assessors  had  ever  possessed  individually  or 
collectively. 

The  representatives  of  the  corporations  opposed  the 
use  of  such  information  on  the  ground  that  it  was  secured 
for  another  purpose.  Since  the  purpose  of  the  commis- 
sion was  to  regulate  rates  for  service,  the  corporations 
had  estimated  the  value  of  their  properties  at  a  rather 
liberal  figure.  This  was  a  means  of  justifying  freight 
rates  and  other  rates  which  the  public  considered  exces- 
sive. Now,  when  they  were  contending  for  low  valu- 
ations for  the  purpose  of  taxation,  it  was  disconcerting 
to  be  confronted  with  their  own  valuations  for  rate- 
making  purposes.  Moreover,  the  Governor  was  able  to 
quote  from  the  decision  of  a  federal  court  that  the  value 
of  property  for  purposes  of  rate-making  was  the  value 
for  the  purpose  of  taxation.  He  did  not,  however,  pro- 
pose that  the  property  should  be  assessed  at  the  full 
value  as  thus  determined,  but  only  at  about  one-third 
of  that  amount,  it  being  assumed  that  other  property 
was,  on  the  average,  undervalued  in  about  that  propor- 
tion. The  representatives  of  the  corporations  expressed 
the  view  that  much  of  the  property  was  undervalued 
to  an  even  greater  extent,  and  hence  that  their  property 
would  be  overvalued  by  this  plan.  They  did  not  appear 


52  TAXATION  IN  NEVADA 

to  be  in  possession  of  the  data  necessary  to  establish  their 
point,  but  this  was  merely  a  defect  in  information ;  they 
were  correct  in  fact.  When  the  Assessors  were  ques- 
tioned as  to  this  point — the  rate  at  which  other  property 
was  assessed — their  answers  were  evasive,  a  typical  reply 
being,  "I  try  to  get  fifty  or  sixty  per  cent,  but  do  not 
succeed." 

The  actual  valuations  established  in  the  case  of  the 
railroads  in  1910  represent  a  compromise  between  those 
proposed  by  the  Governor  and  those  of  the  previous  year, 
the  Assessors  doubtless  being  influenced  by  a  knowledge 
that  other  valuations  were  pretty  low.  Moreover,  they 
refused  to  assess  the  -telegraph  and  telephone  lines  and 
the  electric  light  and  power  lines.  They  did,  however, 
fix  the  value  for  the  first  time  for  the  Wells-Fargo  and 
the  Pullman  Companies,  using  data  furnished  by  the 
Railroad  Commission.  Further  results  from  the  effort  of 
the  Governor  and  of  his  successor  are  found  in  the  rather 
marked  increase  in  valuations  established  for  railroads 
in  the  years  1911  and  1912  and  in  the  inclusion  of  the 
property  of  Western  Union  Telegraph  Company  in  the 
list  of  public  utilities  valued  by  the  Board  of  Assessors. 

PRACTICAL  RESULTS 

Did  the  State  Board  of  Assessors  accomplish  the 
purpose  for  which  it  was  created?  Probably  it  did  in 
some  measure,  but  the  reply  in  the  affirmative  needs 
some  qualification.  The  outstanding  facts  are  about  as 
follows:  The  total  assessed  valuation  of  the  State  was 
increased  very  markedly  from  1903  to  1912.  But  it  was 
a  period  of  rapid  rise  in  actual  values  and  it  is  not  cer- 


PRACTICAL  RESULTS  53 

tain  that  assessed  valuations  increased  more  rapidly  than 
real  values.  It  is  an  achievement,  however,  if,  in  such  a 
time,  assessments  rise  in  equal  proportions  with  market 
values.  The  valuations  on  small  residence  property  and 
on  the  property  of  small  owners  generally  were  higher 
in  the  beginning  and  they  continued  higher  to  the  end 
than  the  valuations  on  the  big  properties.  The  valua- 
tions on  the  big  properties  such  as  railroads  and  banks 
were,  in  1912,  higher  in  relation  to  real  value  than  were 
the  valuations  of  most  public-service  property  other 
than  railroads,  and  higher  than  the  valuations  on  most 
agricultural  land  and  on  range  live  stock.  The  informa- 
tion relative  to  railroads  and  banks  was  more  complete 
and  accurate.  The  Public  Service  Commission  had  not 
as  yet  gotten  as  complete  data  relative  to  the  value  of 
telephone,  telegraph,  and  electric  light  and  power  lines. 
The  valuations  established  by  the  Board  of  Assessors  on 
cattle,  sheep,  and  other  live  stock  were  fairly  high  in 
relation  to  other  valuations,  but  the  defect  lay  in  the 
count.  It  was  impossible  for  the  Assessors  to  determine 
the  numbers  by  actual  count,  and  so  they  continued  to 
accept  the  statements  of  the  stockmen  or  to  assess  the 
customary  number  without  any  statement.  In  the  case 
of  land  and  other  property  the  old  procedure  of  assess- 
ment continued  and,  since  land  values  were  rising 
rapidly,  the  unchanging  or  slowly  changing  assessment 
valuations  became  increasingly  low  in  proportion  to 
actual  value.  The  fundamental  defect  in  the  system  of 
assessment  lay  in  the  fact  that  the  State  Board  of  Asses- 
sors, taken  in  connection  with  the  local  Assessors  who 
worked  independently,  had  no  method  of  achieving  uni- 


54  TAXATION  IN  NEVADA 

formity  of  results.  The  following  characterization  of 
the  system  as  it  worked  out  is  taken  from  the  report  of 
the  Nevada  Citizens'  Economy  and  Taxation  Committee, 
published  in  1913.  The  statements  refer  to  1912  and 
earlier  years : 

DEFECTS  IN  ASSESSMENTS 

1.  There  is  a  lack  of  uniformity  as  between  counties. 
In  some  counties  the  property,  excluding  railroads,  is 
assessed  on  the  average  at  about  twelve  or  fifteen  per 
cent  of  its  value.     In  other  counties  the  property  is 
assessed  at  approximately  forty  per  cent  of  its  value, 
and,  in  still  others,  at  about  one  hundred  per  cent.    This 
has  the  effect  of  reducing  the  burden  of  state  taxation 
for  some  counties  and  putting  an  extra  burden  on  others. 
For  example:  In  one  county  each  thousand  dollars  of 
real  value,  excluding  railroads,  pays  about  ninety  cents 
state  tax.    In  another  county  property  of  the  same  value 
pays  on  the   average   about   $2.40   state   tax;    and   in 
another  an  equal  amount  pays  about  $4.80. 

2.  There  is  a  lack  of  uniformity  in  the  assessment  of 
different   kinds   of   property.     For  example:     In   one 
county  where  agricultural  and  meadow  land  is  commonly 
assessed  at  about  ten  per  cent  of  its  value,  merchandise 
is  assessed  at  from  twenty  to  forty  per  cent,  and  small 
homes  in  town  at  about  fifty  per  cent.    In  another  county 
agricultural  land  is  assessed  at  about  one-third  of  its 
value,  and  much  of  the  town  property  at  over  two-thirds 
of  its  value. 

Alfalfa  land  varies  in  value  from  about  seventy-five 
dollars  an  acre  to  about  two  hundred  and  fifty  dollars, 
depending  upon  the  quality  of  the  land,  the  supply  of 
water,  and  the  nearness  to  market.  Some  such  land  is 
assessed  at  six  dollars  an  acre;  much  of  it  at  about 
ten  dollars  an  acre;  and  in  a  few  cases  fifty  dol- 
lars is  the  value  assessed.  In  some  cases  only  about 
five  per  cent  of  the  estimated  actual  value  is  assessed; 


DEFECTS  IN  ASSESSMENTS  55 

in  other  instances  the  land  is  assessed  at  thirty  or  forty 
per  cent  of  its  value.  It  appears  probable  that  most 
alfalfa  and  cultivated  land  is  assessed  at  about  ten  or 
fifteen  per  cent  of  its  selling  value. 

The  descriptions  of  land  on  the  Assessor's  books  often 
ignore  the  most  important  factor  in  determining  value, 
namely,  the  existence  or  nonexistence  of  a  water  right 
in  the  case  of  "pasture  lands"  and  "desert  lands, ""home- 
stead land"  and  "patented  land."  In  many  cases  there 
is  no  description  of  the  cultural  state  of  the  land  at  all. 

The  assessed  value  of  stocks  of  merchandise  in  relation 
to  inventory  value  or  estimated  value  varies  from  eleven 
per  cent  to  forty-two  per  cent.  Very  commonly  such 
property  is  assessed  at  about  twenty  or  twenty-five  per 
cent  of  its  actual  value. 

Small  homes  in  the  more  prosperous  towns  are 
assessed,  as  a  rule,  at  between  forty-five  per  cent  and 
sixty-five  per  cent  of  their  real  value,  with  about  fifty 
per  cent  as  the  average.  Larger  residences  are  usually 
assessed  at  a  lower  rate,  varying  from  twenty-five  to 
forty-five  per  cent  of  actual  value.  In  other  towns  the 
assessed  valuation  of  homes  in  relation  to  real  values  is 
higher,  in  some  cases  approximating  closely  to  actual 
values  and  in  other  eases  exceeding  actual  values. 

Banks  are  commonly  assessed  at  about  fifty  or  sixty 
per  cent  of  the  par  value  of  the  stock,  plus  the  surplus, 
but  in  one  instance  a  bank  is  assessed  for  only  about 
twenty-three  per  cent  of  this  amount.  • 

The  Central  Pacific  Railroad  is  assessed  at  about  fifty 
per  cent  of  its  value  as  estimated  by  the  State  Railway 
Commission  for  purposes  of  rate-making,  and  at  about 
twenty-seven  per  cent  of  the  value  claimed  by  the 
railroad  for  the  same  purpose. 

The  committee  has  not  secured  a  sufficient  amount  of 
reliable  information  relative  to  livestock  assessments  to 
justify  a  definite  conclusion,  but  there  is  some  reason  to 
believe  that  in  some  cases  the  number  returned  is  not  over 
one-third  the  actual  number,  while  in  other  cases  as 


56  TAXATION  IN  NEVADA 

many  as  two-thirds  of  the  real  number  are  returned  to 
the  Assessor. 

3.  There  is  lack  of  uniformity  as  between  different  own- 
ers. Some  Assessors  practically  leave  each  man  to  make 
his  own  assessment  and  some  owners  reduce  valuations 
more  than  others.  Again,  it  is  much  harder  for  the 
Assessor  to  estimate  the  value  of  very  large  property 
holdings  than  it  is  to  estimate  that  of  small  holdings. 
As  a  consequence,  there  is  a  strong  tendency  for  the 
large  owners  to  escape  a  part  of  their  taxes.  Moreover, 
the  man  who  insists  on  low  valuations  will  usually  have 
the  advantage  of  the  citizen  who  submits  to  his  assess- 
ment without  objections. 

The  preceding  conclusions  are  based  on  information 
relative  to  a  considerable  number  of  assessments  in  each 
of  six  counties,  and  to  a  smaller  number  in  other  coun- 
ties. From  the  large  quantity  of  data  collected  the  fol- 
lowing illustrative  cases  are  submitted : 

1.  A  ranch  of  820  acres  with  a  considerable  acreage  under 
cultivation  recently  sold  for  $33,000.    It  was  assessed  at  $3.240. 
or  less  than  ten  per  cent  of  its  sale  price.    This  ranch,  accord- 
ing to  the  committee's  method  of  estimation,  is  worth  $30.298. 
As  this  is  less  than  the  sale  price,  it  appears  that  our  estimate 
is  fairly  conservative. 

2.  Another  ranch  is  offered  for  sale  by  the  owner  for  $44,000. 
According  to  our  estimate  it  is  worth  $37,455.     It  is  assessed 
at  $6,330,  or  less  than  fifteen  per  cent  of  the  price  set  by  the 
owner. 

3.  Another  ranch  recently  sold  for  $16,000.    It  is  assessed  at 
$2,000,  or  twelve  and  one-half  per  cent  of  the  sale  price. 

4.  Another  ranch  recently  sold  for  $100,000.     It  is  assessed 
at  $10.500.  or  ten  and  one-half  per  cent  of  sale  price. 

5.  Another  ranch  recently  sold  for  $25,000.     It  is  assessed 
at  $2,000.  or  eight  per  cent  of  sale  price. 

6.  Choice   land   of   several    ranches    in   a   certain    valley   is 
assessed  at  $33  per  acre.     Several  farms  in  this  valley  have 
sold  in  recent  years  at  from  $200  to  $250  an  acre.     Best  land 
is  assessed  at  about  twelve  per  cent  of  actual  value. 

The  above  instances  are  submitted  as  typical  of  agri- 
cultural land  assessments  in  several  important  counties. 


DEFECTS  IN  ASSESSMENTS  57 

A  great  number  of  cases  could  be  cited  showing  about 
the  same  conditions.  There  are,  however,  some  extreme 
cases  where  the  property  is  assessed  at  as  low  as  five  per 
cent  of  the  estimated  value ;  at  the  opposite  extreme  the 
rate  is  about  twenty  per  cent  in  these  counties.  In  some 
other  parts  of  the  State,  land  is  assessed  at  a  higher  per 
cent  of  its  value.  The  following  examples  are  given : 

7.  A    small    ranch    near    the    railroad    was    purchased    for 
$10,000  six  or  seven  years  ago.     The  owner  recently  refused 
$17,500  for  it.     It  is  assessed  for  $5,130,  or  about  thirty  per 
cent  of  the  price  offeree}. 

8.  A  small   ranch,   recently  sold  for  $9,000,   is  assessed  at 
$1,890,  or  about  twenty -one  per  cent  of  sale  value. 

9.  A  ranch  for  which  $35,000  was  offered  recently  is  assessed 
at  $12,540,  or  about  thirty-five  per  cent  of  the  price  offered. 

10.  An  owner  offers  to  sell  a  ranch  for  $40.000.    It  is  assessed 
at  $17,000,  or  about  forty-five  per  cent  of  price  asked. 

11.  A  ranch,  recently  sold  for  $45,000,  is  assessed  at  $13,870, 
or  about  thirty  per  cent  of  the  sale  value. 

12.  A  ranch,  recently  sold  for  $35.000.  is  assessed  at  $13,000, 
or  thirty-seven  per  cent  of  the  sale  value. 

13.  A  house  and  four  lots  in  a  county-seat,  estimated  to  be 
worth  $6,000,  is  assessed  at  $3,000.  or  about  forty-three  per  cent 
of  the  value. 

14.  Another  home  in  the  same  town,  estimated  to  be  worth 
$1,500,  is  assessed  at  $1,000,  or  sixty-six  and  two-thirds  per  cent. 

15.  A  small  house,  estimated  to  be  worth  $4,500,  is  assessed 
at  $2,150,  or  forty-eight  per  cent  of  value. 

16.  A  small  home  estimated  to  be  worth  $4.500,  is  assessed 
at  $2,400,  or  about  fifty-three  per  cent  of  value. 

17.  A  small  house  on  a  large  piece  of  city  land.    Cost  of  con- 
struction, $1,000.     Assessed  at  $300,  or  thirty  per  cent  of  cost. 

18.  A  small  house  which  has  suffered  considerable  deteriora- 
tion since  it  was  built.  Probable  value  of  house  $2,000.  Assessed 
for  $1,500,  or  seventy-five  per  cent  of  value.     The  assessment 
was  not  so  high  a  per  cent  of  real  value  ten  years  ago  when 
the  house  was  in  better  repair. 

19.  A  lai'ge  elegant  residence  is  assessed  at  about  thirty  per- 
cent of  what  it  cost  the  owner  at  a  recent  purchase. 

20.  A  smaller  residence  is  assessed  at  nearly  fifty  per  cent 
of  cost  of  lots  and  construction. 


58  TAXATION  IN  NEVADA 

21.  Two  counties  report  that  homes  are  assessed  at  nearly 
or  quite  the  full  cash  value. 

22.  One  county  reports  that  homes  are  assessed  at  more  than 
they  could  be  sold  for. 

23.  A  large  stock  of  merchandise  is  assessed  at  about  twenty- 
five  per  cent  of  estimated  inventory  value. 

24.  A  smaller  store  in  the  same  town  as  23  is  assessed  forty- 
two  per  cent  of  estimated  inventory  value. 

25.  A  large  stock  of  merchandise  in  another  town  is  assessed 
at  about  twenty-five  per  cent  of  inventory  value. 

26.  A  smaller  stock  of  merchandise  assessed  at  twenty -eight 
per  cent  of  inventory  value. 

27.  A  still  smaller  stock  of  merchandise  in  the  same  town  as 
26  assessed  at  thirty-seven  per  cent  of  inventory  value. 

28.  A  large  stock  of  merchandise  in  another  town  is  assessed 
at  about  eleven  per  cent  of  the  inventory  value. 

The  estimated  value  of  each  bank  as  used  by  the  com- 
mittee is  equal  to  the  par  value  of  the  stock  plus  the  sur- 
plus. 

29.  A  large  bank  is  assessed  at  fifty  per  cent  of  its  estimated 
value. 

30.  A  small  bank  is  another  county  is  assessed  at  fifty  per 
cent  of  estimated  value. 

31.  A  large  bank  in  the  same  county  as  30  is  assessed  at 
sixty-four  per  cent  of  its  estimated  value. 

32.  Another  bank  is  assessed  at  fifty-three  per  cent  of  its 
estimated  value. 

33.  A  small   bank  in  another  county   is   assessed  at  about 
twenty-three  per  cent  of  its  estimated  value.    This  case  appears 
to  be  exceptional. 

34.  The  following  is  taken  from  an  assessment  roll : 

Personal  Property 
100  horses 
1  stallion 
1  jack 
1,000  stock  cattle 

75  hogs 
10,000  sheep 

Wagons  and  machinery 

Total  assessed  for  $25.000 


DEFECTS  IN  ASSESSMENTS  59 

It  will  be  observed  that  i'f  the  sheep  were  assessed  at 
the  rate  fixed  by  the  State  Board  of  Assessors,  $2.50  per 
head,  the  other  live  stock,  including  1,000  stock  cattle, 
was  not  assessed  at  all. 

35.  A  stockman  assessed  for  500  sheep  is  reported  as  having 
sold  sheep  to  the  value  of  $23,000  during  the  season.  The 
popular  inference  is  that  the  owner  possessed  a  much  larger 
flock  than  he  returned  to  the  Assessor. 

From  confidential  sources,  information  regarded  as 
very  nearly  accurate  has  been  received  that  one  large 
sheep  owner  is  assessed  for  about  thirty-five  per  cent  of 
the  number  owned,  not  counting  lambs. 

It  cannot  be  asserted  on  the  basis  of  the  present 
information  that  the  cases  of  livestock  assessments  here 
cited  are  typical.  Further  information  is  needed.  Prob- 
ably these  cases  are  extreme. 

The  following  data  relative  to  bullion  tax  collections 
and  bullion  tax  evasions  has  been  received  since  the 
meeting  of  the  committee,  and  it  cannot  be  considered, 
strictly  speaking,  as  a  part  of  the  report  of  the  com- 
mittee, but  the  chairman  takes  the  liberty  of  inserting  it. 
As  the  information  is  for  a  few  mining  corporations  only, 
their  names  are  withheld.  When  tax  evasions  are  as  com- 
mon as  they  are  in  this  State,  it  would  be  unfair  to 
present  an  incomplete  list  of  those  who  are  guilty  of  this 
offense. 

The  chief  way  in  which  mining  corporations  evade 
their  taxes  is  by  organizing  secondary  corporations  for 
transportation  and  reduction  purposes,  and  by  doing 
the  business  in  such  a  way  as  to  make  it  appear  on  the 
surface  that  the  mining  corporation  is  making  a  very 
small  profit,  but  that  the  business  of  the  secondary  cor- 
porations is  very  profitable.  This  may  be  illustrated  by 
the  following  purely  hypothetical  case : 

Suppose  that  in  the  case  of  a  given  mine  the  ore  te  worth 


60  TAXATION  IN  NEVADA 

$30  a   ton,  aiid  that  the  actual  necessary  cost  and  artificial 
higher  cost  as  reported  are  as  follows : 

Actual  necessary  Higher  costs 

costs  reported 

Cost  of  extraction $4.00  $4.<m 

Cost  of  transportation 50  5.00 

Cost  of  reduction....                 .    5.00  12.00 


Total  cost $9.50  $21.00 

If  thirty  dollars  worth  of  bullion  is  recovered  from  a 
ton  there  would  be  real  net  proceeds  equal  to  $20.50  a 
ton,  but  under  the  system  of  artificial  costs  the  net  pro- 
ceeds are  reduced  to  $9.  The  secondary  corporation, 
which  is  owned  by  the  same  people  and  which  received 
five  dollars  for  doing  fifty  cents  worth  of  service  is,  of 
course,  able  to  show  tremendous  profits,  but  such  profits 
escape  taxation. 

In  the  computations  by  which  the  following  results 
were  reached,  the  actual  net  proceeds  are  considered  as 
equal  to  the  dividends  for  the  period  plus  any  additions 
to  the  undivided  profits  in  the  treasury  or  minus  any 
decrease  in  the  undivided  profits : 

Corporation  A  returned  for  purposes  of  taxation  about  forty- 
two  per  cent  of  the  actual  net  proceeds. 

Corporation  B  returned  for  purposes  of  taxation  about  fifteen 
per  cent  of  the  actual  net  proceeds. 

Corporation  C  returned  for  purposes  of  taxation  about  thirty- 
two  per  cent  of  the  actual  net  proceeds. 

Corporation  D  returned  for  purposes  of  taxation  about  fifty- 
eight  per  cent  of  the  actual  net  proceeds. 

Corporation  E  returned  for  purposes  of  taxation  about  forty- 
seven  per  cent  of  actual  net  proceeds. 

One  corporation  reports  the  cost  of  extraction  to  its 
stockholders  at  a  little  more  than  one-half  the  cost  as 
reported  to  the  Assessor. 

Another  company  reported  the  cost  of  reduction  and 
sale  to  its  stockholders  at  a  little  more  than  one-fourth 
the  cost  as  reported  to  the  Assessor. 

Similar  disagreements  exist  in  the  case  of  other  com- 
panies. 


DEFECTS  IN  ASSESSMENTS  61 

Where  the  data  are  available  they  go  to  show  that  a 
very  large  share  of  the  dividends  are  earned  by  the  sec- 
ondary corporations.  Such  secondary  corporations  have 
been  aptly  named  " milking  corporations,"  their  purpose 
being  to  take  the  profits. 

While  our  constitution  requires  creditors  to  pay  tax 
on  solvent  credits  whether  secured  by  mortgage  or  not, 
and  also  a  tax  on  money,  these  forms  of  property  are, 
in  practise,  able  to  excape  taxation  almost  entirely.  In 
this  State  the  amount  of  revenue  derived  from  the  tax  on 
mortgages  and  on  money  and  bank  deposits  and  other 
credits  is  so  small  as  to  be  negligible.  Moreover,  it  is 
not  possible  to  reach  effectively  such  forms  of  property 
under  our  general  property  tax  law.  Perhaps  it  would 
be  possible  to  enforce  the  law  so  far  as  it  applies  to 
mortgages  and  bank  deposits,  but  this  would  doubtless 
have  unfortunate  economic  effects.  The  present  tendency 
in  legislation  is  to  exempt  such  forms  of  property  so 
far  as  the  ordinary  property  tax  is  concerned. 

While  there  are  very  serious  underassessments  and 
inequalities  of  assessment  in  this  State,  it  must  not  be 
inferred  that  these  conditions  are  peculiar  to  Nevada, 
or  that  conditions  are  worse  here  than  they  are  or  have 
been  in  other  States.  An  extensive  reading  of  the  litera- 
ture treating  of  the  experience  of  many  other  States 
reveals  the  fact  that  the  system  of  taxation  and  of 
assessment  has  produced  just  such  results  in  the  other 
States.  Such  results  are  the  regular  and  normal  outcome 
of  the  system  and  are  not  due  to  any  unusual  inefficiency 
on  the. part  of  the  Assessors  of  this  State,  or  to  any 
unusual  perversity  on  the  part  of  property  owners  in 
this  State.  It  is  the  system  that  is  wrong. 

A  certain  sort  of  uniformity  of  valuation  was  achieved 
by  the  State  Board  of  Assessors  in  relation  to  the  prop- 
erty of  railroads — uniformity  possibly  not  contemplated 
by  the  constitution.  In  general,  the  policy  of  the  board 


62  TAXATION  IN  NEVADA 

was  to  assess  the  property  of  a  given  corporation  or  line 
on  a  state  unit  basis,  and  then  to  determine  the  value 
per  mile  by  dividing  the  total  value  by  the  number  of 
miles.  The  value  assessed  to  each  county  was  determined 
by  multiplying  this  value  by  the  number  of  miles.  This 
method  has  been  applied  more  generally  during  the  last 
four  years  under  the  State  Tax  Commission  and  will  be 
discussed  in  connection  with  the  work  of  the  commission.1 
In  1903  the  Legislature  adopted  a  device  for  securing 
higher  assessments  which  was  wrong  in  principle  and, 
in  the  main,  futile  in  practise.  The  law  provided  for  a 
gradual  reduction  of  the  rate  of  taxation  for  county 
purposes.2  It  was  supposed  that,  with  the  reduction  of 
the  rate,  the  counties  would  be  compelled  to  assess  at 
higher  valuations.  The  injustice  of  the  act  lay  in  the 
fact  that  the  reduction  of  rate  was  to  continue  until  all 
counties  reached  the  same  maximum  tax  rate — 50  cents  on 
the  hundred  dollars  for  county  purposes.  This  required 
the  counties  with  large  and  highly  valuable  railroad  mile- 
age to  reduce  their  rate  to  a  comparatively  small  extent 
because  their  rate  was  already  low,  not  on  account  of 
high  valuations,  but  because  of  the  fact  that  the  railroads 
paid  most  of  the  tax.  On  the  other  hand,  the  counties 
of  small  wealth  which  were  already  assessed  at  compar- 
atively high  valuations  were  required  to  reduce  their 
rates  and  consequently  to  increase  their  valuations  to  a 
very  great  degree.  The  futility  of  the  law  arose  from 
the  fact  that  there  were  some  loopholes  for  evasion 
through  contracting  indebtedness  and  through  the  fact 

'See  Chapter  V.     'Nevada  Statutes,  1903,  p.  107. 


THE  NEVADA  TAX  COMMISSION  63 

that  when  the  pressure  began  to  be  felt,  some  counties 
secured  exemption  by  legislative  acts,  so  that  in  fact  it 
came  to  apply  only  where  it  could  apply  without  affecting 
valuations  seriously.1  The  actual  value  of  property  was 
increasing  in  some  counties  so  rapidly  that  they  could 
comply  with  the  law  without  raising  valuations  and  with- 
out inconvenience.  Probably  the  act,  as  originally 
passed,  was  unconstitutional  and  if  not,  the  special  acts 
exempting  certain  counties  from  its  operation  are  almost 
certainly  so,  but  no  county  ever  cared  to  carry  the  ques- 
tion to  the  courts.  It  has  been  easier  to  get  legal  exemp- 
tion whenever  it  was  inconvenient  to  observe  the  pro- 
visions of  the  act.  This  law  having  failed  to  accomplish 
its  purpose,  it  was  repealed  in  1917. 

THE  NEVADA  TAX  COMMISSION 

The  State  Tax  Commission,  created  in  1913,  represents 
the  most  recent  step  in  the  direction  of  centralized 
administrative  control.  Under  the  original  law  this  body 
consisted  of  three  members,  two  of  whom  were  appointed 
by  the  Governor,  the  t)ther  being  a  member  of  the  State 
Railroad  Commission.  In  1915  the  law  was  amended  in 
such  a  way  as  to  provide  for  a  commission  of  five  mem- 
bers— the  Governor  and  the  three  members  of  the  Rail- 
road Commission,  with  one  appointive  member  who 
served  as  Secretary.  In  1917  the  law  was  again  amended 
so  that  the  present  commission  has  seven  members — the 
Governor,  one  member  of  the  Railroad  Commission,  and 
five  appointive  members.  The  five  appointive  members 
are  expected  to  give  only  a  limited  amount  of  their 

Nevada  Statutes,  1905,  p.  188. 


64  TAXATION  IX  NEVADA 

time  to  the  work  of  the  Commission,  and  they  are 
appointed  to  represent  certain  large  property  interests: 
(1)  land,  (2)  live  stock,  (3)  business,  (4)  mining,  and (5) 
banking.1 

Very  broad  powers  were  given  to  the  original  com- 
mission, including  the  final  power  of  equalization  for 
all  property,  but  this  power  of  equalization  now  rests 
with  the  State  Board  of  Equalization,  a  body  consisting 
of  the  members  of  the  Tax  Commission  and  the  various 
County  Assessors.  The  commission  still  possesses  large 
power,  including  the  following : 

1.  To   exercise    general    supervision    over   the    entire 
revenue  system  of  the  State. 

2.  To    confer    with,    advise,    and    direct    Assessors, 
Sheriffs,    County  Boards  of  Equalization,  and  all  other 
county  revenue  officers  as  to  their  duties  in  connection 
with  revenue. 

3.  To  prescribe  uniform  rules  for  the  assessment  of 
property  in  the  various  counties,  and  to  prescribe  all 
forms  and  blanks  for  the  use  of  Assessors. 

4.  To   summon    witnesses,    administer   oaths,    and   to 
examine  the  accounts  of  any  person,  firm,  or  corporation. 

5.  To  require  Boards  of  County  Commissioners  to  sub- 
mit budgets  for  county  expenditures,  and,  under  certain 

'The  law  reads  as  follows :  *  *  *  "One  of  the  commissioners  shall  be 
one  of  the  associate  commissioners  of  the  railroad  commission  of  the  State 
of  Nevada,  to  be  designated  by  the  Governor ;  one  of  said  commissioners 
shall  be  versed  in  and  possess  a  practical  knowledge  and  experience  in  the 
classification  of  land  and  the  value  thereof ;  one  of  said  commissioners  shall 
be  versed  in  and  possess  a  practical  knowledge  and  experience  in  live  stock 
and  the  value  thereof ;  one  of  said  commissioners  shall  be  versed  in  and 
possess  a  practical  knowledge  and  experience  in  the  mining  industry  :  one 
of  the  said  commissioners  shall  be  versed  in  and  possess  a  practical  knowl- 
edge and  experience  in  business  ;  one  of  said  commissioners  shall  be  versed 
in  and  possess  a  practical  knowledge  and  experience  in  banking ;  each  of 
said  commissioners  at  the  time  of  his  appointment  shall  be  actively  engaged 
in  the  business  of  the  department  which  he  is  chosen  to  represent  on  the 
commission  *  *  *." 


THE  NEVADA  TAX  CrOJ/.l//8#/O.V  65 

conditions,  to  direct  such  boards  to  modify  the  county 
tax  rate. 

6.  To  assess  all  railroad  and  other  property  of  public- 
utility  corporations. 

7.  To  sit  with  the  County  Assessors  as  a  State  Board 
of  Equalization. 

8.  To  determine  the  net  proceeds  of  all  mines. 

An  experience  of  four  years  with  commission  assess- 
ments is  now  available  for  examination  and  it  is  possible 
to  discover  certain  pretty  evident  tendencies.  While 
there  has  been  a  series  of  changes  in  the  constitution  of 
the  commission,  and  while  these  changes  indicate  some 
lack  of  stability  in  state  policy  due  to  the  opposition  of 
certain  prominent  taxpaying  interests,  the  actual  work 
of  the  commission  has  been  characterized  by  a  high  degree 
of  continuity.  So  far,  the  commissioners  have  been  men 
of  high  ability,  and  they  have  worked  zealously  and 
unitedly  for  more  uniform  assessments  and  for  higher 
valuations  for  most  sorts  of  property.1 

The  first  commission  was  appointed  in  March,  1913, 
after  part  of  the  property  had  been  assessed — too  late  to 
enable  it  to  secure  adequate  information  for  many  pur- 
poses. The  assessment  of  1914,  the  first  full  year  of  the 
commission's  existence,  shows  a  gain  of  about  35%  over 
the  total  for  1912.  There  were  important  increases  in 

'There  has  been  less  change  in  the  personnel  of  the  commission  than  one 
might  infer  from  a  reading  of  the  various  amendments  to  the  law.  Governor 
Boyle  was  an  appointed  member  of  the  first  commission  and  he  now  serves 
as  an  ex  officio  member.  Hon.  J.  F.  Shaughnessy  of  the  Railroad  Commis- 
sion has  served  as  Tax  Commissioner  from  the  first.  Until  quite  recently 
Hon.  L.  F.  Adamson  has  served  as  Secretary  of  the  Commission,  and  during 
a  part  of  the  time  he  was  a  member.  Hon.  F.  N.  Fletcher,  who  now  serves 
as  Secretary,  was  formerly  a  member  of  the  commission. 

3 


66  TAXATION  IN  NEVADA 

the  valuation  of  certain  public  utilities  and  of  much  land 
and  live  stock. 

The  commission  has  been  confronted  by  some  pretty 
difficult  problems,  some  of  which  are  inherent  in  any 
advance  movement  and  some  of  which  grow  out  of  the 
specific  provisions  of  the  law.  It  was  charged  with 
heavy  responsibilities  and  was  given  the  legal  authority 
essential  to  the  discharge  of  those  responsibilities.  But 
it  was  not,  in  the  nature  of  things,  possible  for  the  com- 
mission to  secure  sufficient  information  for  its  purpose, 
and  with  sufficient  promptitude.  Doubtless,  some  of  its 
actions  have  been  based  on  assumptions  not  wholly  true. 
It  is  fairly  apparent,  however,  that  the  commission 
began  its  work  with  both  courage  and  caution.  The 
important  changes  in  valuations  have  usually  been  in  the 
right  direction  and  its  few  mistakes  are  not  of  the  self- 
perpetuating  variety ;  they  are  the  means  whereby  both 
the  commission  and  the  public  are  getting  a  better  knowl- 
edge of  the  situation.  On  the  whole,  the  commission  plan 
appears  to  be  not  only  the  best  in  theory,  but,  so  far  as 
one  may  judge  from  actual  results,  it  is  achieving  a 
greater  degree  of  uniformity  than  has  existed  hitherto. 
A  few  comparisons  of  the  valuations  of  1912  with  those 
of  later  years  may  be  interesting  and  instructive. 

The  original  assessments  of  public  utilities  in  1913 
were  made  by  the  old  State  Board  of  Assessors  which  held 
its  session  about  two  months  before  the  new  Tax  Com- 
mission was  created.  The  Tax  Commission,  however, 
exercised  authority  in  equalization.  In  the  time  avail- 
able for  its  work  it  was  not  able  to  secure  adequate  data 
for  all  purposes,  but  it  did  advance  the  value  of  certain 


THE  NEVADA   TAX  COMMISSION  67 

classes  of  property,  including  some  public  utilities,  very 
markedly,  and  in  most  cases  there  were  further  advances 
the  following  year.  For  example,  the  Tonopah  Water 
Company  was  originally  assessed  in  1913  at  $120,045. 
The  Tax  Commission  raised  this  to  $150,000  for  1913, 
and  to  $247,790  in  1914,  and  to  $320,400  in  1916.  Simi- 
larly, the  valuation  of  the  property  of  the  Nevada- 
California  Power  Company  was  increased  from  $170,382 
to  $380,000  in  1913,  and  to  $2,221,417  in  1914  — an 
amount  over  thirteen  times  as  great.1  The  Truckee  River 
General  Electric  Company  had  its  valuations  raised  from 
$381,639'  to  $551,150  in  1913,  to  $765,383  in  1914,  and 
to  $820,890  in  1916.  In  general,  the  highest  rates  of 
increase  fell  on  local  public-utility  corporations  such  as 
power,  light,  and  water  companies  and  on  telephone  and 
telegraph  companies — the  public  utilities  that  the  State 
Board  of  Assessors  had  refused  to  value  collectively  in 
1910.  It  is  not  to  be  inferred  that  there  was  any  uni- 
formity in  these  increases.  For  example,  in  the  case  of 
telephone  and  telegraph  companies,  some  were  advanced 
by  less  than  twenty  per  cent.  The  chief  line,  the  Western 
Union,  was  raised  over  one  hundred  per  cent,  and  the 
Bell  Telephone  Company  over  two  hundred  per  cent. 

The  commission  has  devoted  much  attention  to  the 
valuation  of  land,  establishing  classifications  and  increas- 
ing the  valuations  in  a  marked  degree  and  in  such  way  as 
to  equalize  the  taxes  as  between  counties  better  than 

'In  a  recent  decision  the  Federal  District  Court  has  held  that  this  assess- 
ment was  excessive  because  too  much  of  the  value  of  the  intangible  property 
was  attributed  to  the  transmission  system.  In  the  opinion  of  the  court  the 
situs  of  a  considerable  part  of  the  intagible  value  is  the  same  as  that  of  the 
power  plant.  This  opinion  is  significant  in  relation  to  the  "collective-unit- 
valuation-mile-unit-apportionment"  method  of  assessing  public  utilities. 


(is  TAXATION  7AT  NEVADA 

before.  In  relation  to  livestock  assessments  the  chief 
effort  of  the  commission  has  been  to  secure  a  better 
count  of  sheep  and  cattle.  Armed  with  more  adequate 
power  to  secure  the  necessary  information,  the  commission 
has  adopted  methods  of  assessment  for  the  net  proceeds 
of  mines  which  secure  better  results,  but  the  revenues 
from  this  source  continue  to  fluctuate  mainly  accord- 
ing to  the  rise  and  fall  of  the  mining  industry.  As  a 
general  result  of  the  work  of  the  commission,  the  valua- 
tion of  taxable  property  has  been  increased  to  a  notable 
degree.1  Much  property  previously  unassessed  has  been 
put  on  the  assessment  rolls.  As  a  rule  the  increases  in 
value  have  applied  chiefly  to  property  that  was  pre- 
viously undervalued.  The  burden  of  taxation  is  appor- 
tioned more  nearly  as  contemplated  by  the  law.  The 
Tax  Commission  is  the  most  effective  agency  for  securing 
equal  and  uniform  assessments  that  the  State  has  evolved 
up  to  the  present  time. 

'From  1912  to  1916  the  total  assessed  valuations  subject  to  ad  valorem 
tax  has  increased  by  73%.  This  has  been  a  period  of  comparatively  small 
increase  in  real  values,  and  the  gain  in  assessed  valuations  may  be  attributed 
almost  wholly  to  more  efficient  assessments. 


CHAPTER  IV 
TAXATION  OP  MINES  AND  PROCEEDS  OF  MINES 

The  problem  of  the  early  law-makers  of  Nevada  was 
to  devise  a  system  of  taxation  adapted  to  her  unique 
economic  situation.  Their  experience  was  useful  only  to 
a  limited  extent.  They  were  familiar  with  the  general 
property  tax,  but  this  was  objectionable  to  the  dominant 
mining  interests  so  far  as  it  applied  to  their  own  prop- 
erty, and,  furthermore,  there  were  reasons  based  on  con- 
siderations of  a  more  public  character  for  conceding  to 
the  mining  industry  special  treatment.  But  there  was, 
at  the  time  of  the  adoption  of  the  constitution,  very  little 
property  in  the  State  aside  from  mines,  and  that  little 
was  found  chiefly  in  mining  camps.  There  were  no  rail- 
roads and  there  was  no  agriculture  excepting  a  little 
gardening  and  hay-making  wholly  dependent  on  the 
mines  for  a  market.  No  Eastern  State  ever  faced  a 
similar  situation,  and  even  California,  a  mining  State, 
was  never  so  one-sided  in  its  economic  development. 

Most  of  the  early  miners  had  lived  previously  in  Cali- 
fornia, and  the  customs  and  laws  of  that  State  were 
influential  in  molding  early  legislation  in  Nevada.1  The 
first  Legislature  of  the  Territory  of  Nevada  enacted  the 

'Apparently  the  early  placer  mines  of  California  were  exempt  from  tax- 
ation for  the  reason  that  it  was  practically  impossible  to  tax  them.  The 
value  of  a  claim  could  not  be  told  with  even  an  approximate  degree  of 
accuracy  and,  moreover,  the  valuable  claim  of  assessment  time  might  be 
worked  out  and  worthless  by  taxpaying  time.  When  deep  mining  began 
the  Legislature  exempted  mines  from  taxation  by  specific  provision.  (Stat- 
utes of  California,  1857,  p.  326.)  In  1872,  when  mining  interests  had 
declined  in  power,  the  mines  were  deprived  of  this  advantage  and  mines 
were  made  taxable  as  real  estate.  (Political  Code  of  California,  1872,  p.  4.) 


70  TAXATIOy  7.V  NEVADA 

provision  of  the  California  law  which  exempted  mines 
from  taxation,  but  on  account  of  the  lack  of  other  sorts 
of  property  this  plan  was  abandoned  almost  immediately, 
and  the  Territory  tried  a  variety  of  compromise 
expedients  designed  to  secure  revenue  from  the  mines. 

Nevada 's  experience  as  a  Territory,  extending  over  but 
four  years,  was  too  brief  to  permit  of  the  experimentation 
necessary  to  the  evolution  of  a  system  of  taxation  adapted 
to  her  peculiar  economic  circumstances.  The  early  revenue 
laws  of  California,  so  influential  in  Nevada,  represent  the 
early  crude  and  imperfect  efforts  of  that  State  to  meet 
pioneer  conditions.  The  rather  rigid  and  specific 
requirements  of  the  Nevada  constitution,  as  interpreted 
by  the  Supreme  Court,  do  not,  at  present,  permit  of  those 
modifications  in  our  system  of  taxation  which  are 
demanded  by  the  more  mature  state  of  society.  There 
has  been,  of  course,  a  large  amount  of  legislation — a 
needlessly  large  amount — but,  while  much  of  this  has 
been  useful  and  some  of  it  very  important,  it  has  dealt 
largely  with  administrative  details,  the  fundamental  ques- 
tions being  removed  from  the  sphere  of  legislation. 

The  history  of  taxation  in  Nevada  during  the  terri- 
torial period  (1861-1864)  and  during  the  first  fifteen 
years  of  statehood  consists  largely  of  an  account  of  how 
the  mining  interests  sought  to  escape  taxation  or,  failing 
in  that,  to  keep  their  taxes  as  small  as  possible.  The 
contests  between  the  mining  interests  and  the  other  inter- 
ests, begun  in  the  Territorial  Legislatures,  was  carried  to 
the  two  constitutional  conventions,  to  the  State  Legisla- 
ture, to  the  District  Courts  and  the  Supreme  Court  of 
Nevada  and  to  the  United  States  Courts. 


TAXATION  OF  MIXES  71 

TAXATION  OF  MINES  IN  THE  TERRITORY 

The  first  Territorial  Legislature  (1861)  exempted 
mines  from  taxation  by  specific  provision  and  did  not 
provide  for  a  tax  on  production.1  In  the  early  days  of 
a  mining  camp  this  course  has  much  to  recommend  it.  It 
is  far  from  certain  that  the  mines  have  any  value  in  the 
sense  of  ability  to  pay  a  profit  on  operation,  although 
they  may  have  a  considerable  value  as  measured  by  the 
selling  price  of  stock.  Furthermore,  the  value  of  all 
property  in  the  vicinity  of  the  mine  is  derived  almost 
wholly  from  the  activity  of  the  mine  owners  in  develop- 
ing their  property.  Consequently  there  is  a  tendency  in 
a  new  mining  camp  to  regard  the  man  who  invests  in  an 
unproven  mine  as  a  public  benefactor  deserving  the 
most  liberal  treatment. 

The  second  Legislature  (1862)  moved,  doubtless,  by 
the  need  for  revenue  and  by  the  lack  of  other  property, 
provided  for  a  small  tax  on  the  gross  proceeds  of  mines, 
twelve  cents  on  the  hundred  dollars  for  territorial  pur- 
poses and  eighteen  cents  for  county  purposes.2  This 
rate  was  far  below  the  rate  of  the  general  property  tax, 
which  was  fixed  at  fifty  cents  for  territorial  purposes  and 
at  a  rate  not  to  exceed  eighty  cents  for  county  purposes. 
According  to  the  common  understanding  "  gross  pro- 
ceeds" included  the  value  of  all  the  bullion  recoverable 
from  the  ore.  The  District  Attorney  of  Storey  County, 
however,  in  an  official  opinion,  held  that  the  proceeds  of 
a  mine  included  only  the  value  of  the  untreated  ore  at 
the  mouth  of  the  mine ;  that  the  added  value  of  the 

'Territorial  Statutes,  1861,  p.  146. 
^Territorial  Statutes,  1862,  p.  161. 


72  TAXATION  IN  KEY  AD  A 

bullion  was  the  product  of  the  mills.  From  a  strictly 
economic  viewpoint  the  District  Attorney  was  right,  but, 
through  the  failure  of  the  Legislature  to  say  what  it 
meant  in  clear  language,  about  sixty  per  cent  of  the 
bullion  escaped  taxation. 

The  third  Territorial  Legislature  (1864),  apparently 
convinced  of  its  inability  to  secure  the  desired  revenue  on 
the  basis  of  a  tax  on  proceeds,  enacted  a  law  taxing 
mines  and  mining  claims  under  the  provisions  of  the 
general  property  tax,  the  mines  being  assessed  as  real 
estate.1  This  was  contested  in  the  courts  on  the  ground 
that  the  real  estate  could  not  be  taxed  since  the  title  to 
the  land  still  lay  with  the  United  States  Government. 
This  was  one  of  the  very  early  cases  brought  to  the  new 
State  Supreme  Court  in  1865,  and  the  decision  was  favor- 
able to  the  State.  It  was  held  that  a  mining  claim — 
a  possessory  right  to  mining  ground — was,  under  the 
territorial  ordinance,  taxable.2  This  decision  had  no 
importance  for  the  future,  for  the  new  constitution  had 
a  clause  exempting  mines  from  taxation. 

All  in  all,  the  mines  paid  little  tax  during  the  terri- 
torial period  and,  as  a  consequence,  the  new  State  began 
its  career  with  a  reported  indebtedness  of  $264,110, 
upon  which  the  rate  of  interest  was  from  ten  per  cent 
to  eighteen  per  cent,  the  average  rate  being  over  -four- 
teen per  cent,  and  all  interest  was  payable  semiannually.* 

One  of  the  important  duties  of  the  first  State  Legis- 
lature (1864-65)  was  to  place  its  interpretation  on 
Article  X  of  the  constitution  which  provided  for  the 

'Session  Laws  of  the  Third  Territorial  Assembly,  p.  38. 

51  Nev.  104. 

'Report  of  Territorial  Auditor,  1864,  p.  17. 


TAXATION  OF  MINES  73 

taxation  of  the  "proceeds  only"  of  mines  and  to  exercise 
its  discretion  in  the  interest  of  a  just  apportionment  of 
the  burden  of  supporting  a  State  Government.  This 
Legislature,  said  to  be  dominated  by  the  mining  inter- 
ests,1 provided  for  the  assessment  of  the  proceeds  of 
mines  in  such  a  way  as  to  secure  an  undervaluation,  and 
then  levied  a  tax  on  this  valuation  at  a  rate  much  lower 
than  the  rate  on  property. 

The  term  "proceeds  of  mines"  was  interpreted  to  mean 
the  value  of  the  ores,  not  the  value  of  the  bullion,  and 
the  value  of  the  ore  was  to  be  determined  by  subtract- 
ing twenty  dollars  a  ton  from  the  value  of  the  bullion 
extracted  by  ordinary  processes  and  by  subtracting 
forty  dollars  a  ton  from  the  value  of  the  bullion 
extracted  by  the  Freiburg  process,  and  then  by  taking 
three-fourths  of  the  remainder  as  the  value  of  the  ore 
for  taxation.2  The  twenty  and  forty  dollars  exempted 
were  arbitrary  amounts  considered  as  equal  to  the  cost 
of  transportation  and  reduction  according  to  the  pro- 
cess used.  It  was  claimed  that  these  estimates  were 
excessive,  and  hence  that  they  served  to  exempt  part  of 
the  value  of  the  ore  from  taxation.3  The  Supreme  Court 
did  not,  however,  consider  the  estimate  so  manifestly 
excessive  as  to  render  the  provision  unconstitutional.4 
It  is  probable  that  any  arbitrary  amount,  if  correct  at 
one  time,  would  become  excessive  through  improvements 
in  the  technical  processes  and  the  general  lowering  of 
the  range  of  prices,  which  were  very  high  in  the  early 

'See  note,  p.  80. 

-Laws  of  Nevada,  1864-65,  p.  306. 

3See  note,  p.  80. 

<3  Nev.  179. 


74  TAXATION  IN  NKVADA 

years.  It  is  certain  that  the  cost  of  transportation  and 
reduction  would  vary  considerably  according  to  the 
location  of  the  mine,  according  to  the  character  of  the 
transportation  facilities,  and  to  the  size  and  efficiency 
of  the  reduction  plant.  At  this  distance  it  seems  probable 
that  the  estimate  was  large  enough  to  cover  the  expenses 
in  the  case  of  a  mine  operating  under  rather  unfavorable 
conditions,  and  that  the  big  mines,  with  more  efficient 
and  convenient  plants,  were  able,  by  this  provision,  to 
evade  the  payment  of  taxes  on  a  considerable  part  of  the 
value  of  their  ore. 

I  have  not  been  able  to  find  any  statement  of  the 
reason  for  the  provision  that  only  three-fourths  of  the 
value  as  thus  ascertained  should  be  assessed  for  purposes 
of  taxation,  but  it  is  probable  that  the  mining  interests 
claimed  the  benefit  of  this  arrangement  on  the  ground  that 
property  in  general  is  usually  assessed  at  much  less  than 
it  is  worth  even  when  the  law,  as  in  the  case  of  Nevada, 
provides  for  assessment  at  the  actual  cash  value.  This 
provision  was  declared  unconstitutional  in  the  year  1867.1 

The  total  ad  valorem  rate  of  taxes  on  the  proceeds  of 
mines  for  state  and  local  purposes  was  fixed  at  $l.on  the 
hundred,  while  the  rate  for  property  in  general  was  as 
follows :  For  state  purposes,  $1.25 ;  for  county  purposes, 
not  to  exceed  $1.50;  for  school  purposes,  whatever  the 
local  authorities  might  establish.2  It  appears  to  have 
been  the  understanding  of  the  mining  interests  that  the 
proceeds  of  mines  were  exempt  from  all  taxes  except  the 
fifty  cents  for  state  and  fifty  cents  for  county  purposes, 

'3  Nev.  179. 

-Statutes  of  Nevada,  1864-5,  p.  271,  272. 


TAXATION  OF  MIXES  75 

and  the  language  of  the  act  will  bear  this  construction, 
but  when  a  mining  corporation  contested  the  city  tax 
levied  in  Virginia  City  in  1865,  the  Supreme  Court  let 
its  ideas  of  justice  control  its  interpretation  of  the 
ambiguous  language,  and  declared  that  the  charter  of 
Virginia  City  made  the  proceeds  of  mines  taxable  for 
the  same  purposes  as  was  property  of  other  sorts.1  As  a 
result  of  this  decision  the  charter  of  Virginia  City  was 
amended  in  1866  in  such  a  way  as  to  exempt  the  proceeds 
of  mines  from  municipal  taxation,2  and  a  similar  pro- 
vision was  inserted  in  the  charter  of  Hamilton  in  1869.3 

For  the  two  years  1865  and  1866  the  State  received 
revenue  from  the  proceeds  of  mines  amounting  to  less 
than  thirty  thousand  dollars — an  amount  equal  to  about 
one-tenth  of  one  per  cent  of  the  value  of  the  bullion 
extracted.4  As  a  consequence  the  debt  of  the  State  was 
increasing  at  the  rate  of  over  $150,000  a  year,  the  total 
amount  reported  December,  1866,  being  $585,168.29, 
nearly  all  of  which  was  payable  in  gold.5 

In  April,  1867,  the  Supreme  Court  gave  a  third  and 
most  important  opinion  relative  to  the  taxation  of  mines, 
and,  like  the  previous  opinions,  it  was  unfavorable  to 
the  contention  of  the  mine  owners  who  had  been  able  to 
secure  legislation  so  favorable  to  themselves.  The  gist 
of  the  opinion  was  to  the  effect  that  the  revenue  act  of 
1864-5,  which  had  been  reenacted  with  only  a  few  changes 
in  1866,  was  unconstitutional  in  so  far  as  it  fixed  a  rate 

'2  Nev.  88. 

Statutes  of  Nevada,  1866,  p.  90. 
"Statutes  of  Nevada,  1869,  p.  163-4. 
'Report  of  Controller  for  1866,  p.  6. 
5Report  of  Controller  for  1866,  p.  29. 


76  TAXATION  l.\    \/;i.l/M 

of  tax  on  the  proceeds  of  mines  different  from  that  on 
other  property.1 

This  decision  was  in  no  wise  necessitated  by  the  lan- 
guage of  the  constitution,  nor  was  it  supported  by  the 
opinions  expressed  on  the  floor  of  the  constitutional  con- 
vention, since  the  only  views  there  advanced  were  favor- 
able to  the  idea  that  the  Legislature  would  have  the 
power  to  fix  a  different  rate  on  the  proceeds  of  mines.2 
Furthermore,  a  strict  construction  of  the  clause  exempt- 
ing mines  from  the  operation  of  the  general  property 
tax  would  also  exempt  them  from  the  other  preceding 
provisions  including  the  requirement  of  uniformity. 
Moreover,  if  it  be  contended  that  it  is  the  aim  of  the 
constitution  to  maintain  the  spirit  of  uniformity  and 
equality  while  departing  from  uniformity  of  method,  the 
reply  is  that  from  the  point  of  view  of  the  general  prop- 
erty tax  which  was  commonly  held  at  that  time,  this  aim 
is  not  ordinarily  realized  by  the  requirement  that  the 
rate  of  taxation  on  the  proceeds  of  mines  shall  be  equal 

'Extracts  from  Supreme  Court  opinion  on  the  taxation  of  mines  under 
acts  of  1864-5  and  1866  (3  Nev.  173-181)  : 

"The  first  phrase  to  which  our  attention  is  called  is  this :  'a  uniform 
and  equal  rate  of  assessment  and  taxation.'  We  have  no  hesitation  in  say- 
ing that  the  constitutional  convention,  in  using  the  language  last  quoted, 
meant  to  provide  for  at  least  one  thing  in  regard  to  taxation  ;  that  is,  that 
all  ad  valorem  taxes  should  be  of  a  uniform  rate  or  percentage.  *  *  * 
If  the  language  we  have  quoted  did  not  express  this  idea,  then  it  was  per- 
fectly meaningless.  The  language  used  may  mean  much  more  than  this, 
but  it  cannot  mean  less.  The  constitution  clearly  intends  to  provide  against 
that  species  of  injustice  which  frequently  prevails  in  communities  where 
there  is  one  overshadowing  interest,  the  exemption  of  the  property  con- 
nected with  that  interest  from  its  legitimate  share  of  the  public  bur- 
dens." *  *  * 

"That  the  mines — which  constitute  the  greater  part  of  the  wealth  of  the 
State — have  for  the  last  two  years  almost  entirely  escaped  taxation,  is  true. 
That  the  failure  to  collect  the  due  proportion  of  taxes  from  them  has 
greatly  embarrassed  the  State,  and  thrown  a  heavy  burden  on  that  portion 
of  the  population  least  able  to  bear  it,  is  equally  true." 

'Constitutional  Debates,  pp.  443,  444,  and  520. 


TAXATION  OF  MIXES  77 

to  the  rate  on  the  value  of  other  property  since  the  tax 
on  proceeds  is  a  tax  only  on  the  annual  product,  not  on 
the  value  of  the  producing  mine. 

On  the  whole,  the  court  appears  to  have  been  moved, 
not  by  strict  technical  considerations,  but  by  broad  con- 
siderations of  justice.  Here  were  the  big  dominating 
mining  interests  owning  most  of  the  property  of  the 
State,  achieving  great  fortunes  through  the  bounty  of 
nature,  and,  through  their  political  and  financial  influ- 
ence, securing  laws  which  largely  exempted  them  from 
taxation,  thus  throwing  an  unduly  heavy  burden  upon 
other  interests.  Apparently  the  court  considered  this  so 
manifestly  unjust  that  it  could  not  be  possible  for  the 
constitution  to  leave  such  a  course  open.  We  know 
how  atrociously  unjust  such  discrimination  must  have 
appeared  to  at  least  one  of  the  Supreme  Judges,  since  he 
expressed  himself  very  freely  on  the  general  question  in 
the  constitutional  convention  of  which  he  was  president, 
and  the  language  of  the  opinion  itself,  written  by  another 
member,  while  more  guarded  as  becomes  a-  supreme  court 
opinion,  betrays  a  similar  attitude. 

But  while  dictated  by  considerations  of  justice,  it 
must  be  confessed  that  the  considerations  were  short 
sighted,  for,  even  at  the  time  the  decision  was  made,  the 
circumstances  which  appeared  to  make  it  necessary 
were  passing  away.  The  Legislature  a  few  weeks  earlier 
had,  in  response  to  a  strong  public  sentiment  and  after 
a  long  and  bitter  fight,  repealed  the  discriminatory  pro- 
vision with  one  exception  applying  to  local  taxes,1  and 
had  adopted  a  policy  essentially  similar  to  that  pro- 

'Statutes  of  Nevada,  1867,  p.  159-163. 


78  TAXATION  IN  NEVADA 

mulgated  by  the  court,  thus  showing  that  the  remedy 
could  be  achieved  by  political  action.  Apparently  the 
only  beneficial  effect  of  the  decision  lay  in  the  fact  that 
it  removed  this  specific  question  from  the  sphere  of 
legislative  contests.  On  the  other  hand,  it  deprived  the 
Legislature  of  an  important  power — the  power  of  gradu- 
ating the  rate  —  a  power  which  would  have  enabled  the 
Legislature  in  later  years,  under  conditions  of  greater 
economic  stability  and  political  maturity,  to  have  taxed 
the  proceeds  of  mines  more  nearly  in  harmony  with  the 
spirit  of  uniformity  and  equality  than  is  possible  under 
this  decision. 

The  first  State  Legislature  made  all  taxes  payable  in 
gold  and  silver  coin.  As  specie  was  in  common  use  in 
business  transactions,  the  use  of  legal  tender  govern- 
ment notes  being  practically  unknown  in  Nevada,  this 
requirement  was  natural  and  involved  no  practical 
difficulties.  Valuations  were  made  in  gold  and  taxes 
were  paid  in  gold.  In  1866,  however,  the  section  of  the 
law  containing  this  provision  was  amended  in  such  a  way 
as  to  omit  all  reference  to  the  kind  of  money  in  which 
taxes  were  to  be  paid.  This,  of  course,  had  the  effect  of 
permitting  them  to  be  paid  in  legal  tender  paper  and, 
as  a  matter  of  fact,  most  taxes  were  paid  in  paper  while 
property  in  general  was  assessed  in  terms  of  its  value  in 
coin,  thus  reducing  taxes  of  all  sorts  by  about  a  fourth 
and  incidentally  reducing  salaries  of  public  officials 
proportionately.1 

In  1867  the  Legislature  amended  the  law  to  require 

'Controller's  Report  for  1866.  p.  7. 


TAXATION  OF  31 IX Eft  79 

that  all  property,  including  proceeds  of  mines,  be  assessed 
on  the  basis  of  its  value  in  legal  tender  paper  currency.1 
This  law,  while  apparently  uniform  with  reference  to 
all  property,  was  in  reality  unfavorable  to  the  mine  own- 
ers for  two  reasons.  In  the  first  place  it  reduced  the 
value  of  the  exemption  made  to  cover  the  cost  of  reduc- 
tion, since  this  was  smaller  when  made  in  terms  of  legal 
tender  paper.  Second,  the  procedure  for  determining  the 
value  of  ores  was  such  as  to  make  it  probable  that  higher 
valuations  corresponding  to  the  premium  on  gold  would 
be  made.  Evasions  were  possible  only  by  the  use  of 
outright  fraud.  On  the  other  hand,  the  valuation  of 
other  property  involved  a  larger  element  of  discretion 
and,  in  view  of  the  well-known  conservatism  of  Assessors, 
there  was  little  probability  of  any  serious  increase  in 
such  valuations. 

Under  these  conditions  it  is  not  surprising  to  find  the 
mining  interests  up  in  arms  against  the  law.  They  first 
brought  over  the  Storey  County  Assessor  to  their  point 
of  view,  and  the  proceeds  of  mines  were  assessed  at  their 
value  in  gold,  but  this  was  given  as  the  value  in  paper.2 
Litigation  followed  and  the  District  Court  decided  the 
case  in  such  a  way  as  to  provide  an  easy,  permanent 
method  of  evasion,  but  on  appeal  the  Supreme  Court 
held  the  Assessor  responsible  for  a  strict  procedure  that 
would  preclude  the  possibility  of  evasion  without  direct 
fraud.3 

A  further  concession  made  by  the  mining  interests  in 

'Statutes  of  Nevada,  1867,  p.  169. 

-4  Nev.  180. 

S4  Nev.  182  and  213. 


80  TAXATION  IN  NEVADA 

the  Legislature  of  1867  was  a  reduction  of  the  exemption 
to  cover  cost  of  transportation  and  reduction  from 
twenty  dollars  a  ton  to  eighteen  dollars  a  ton.1 

'Statutes  of  Nevada,  1867,  p.  160. 

The  following  extract  from  the  argument  of  the  Attorney-General  before 
the  Supreme  Court  in  the  case  of  Nevada  v.  Kruttschnitt  is  given,  not  as  an 
unbiased  statement  of  the  situation,  but  as  typical  of  the  views  frequently 
expressed  by  public  men  at  that  time : 

"Before  proceeding  to  discuss  the  particular  points  relied  on  in  this  case, 
it  may  not  be  improper  to  premise  a  few  general  remarks,  made  by  oppos- 
ing counsel  on  the  oral  argument,  in  substance  that  the  tax  sought  to  be 
enforce.d  was  unjust,  and  that  the  suit  was  prosecuted  at  the  instance  of 
state  officials  in  violation  of  the  letter  and  spirit  of  the  revenue  law,  and 
in  violation  of  a  compromise  made  between  the  mine-owners  and  the  Leg- 
islature. 

"It  is  a  sound  principle  of  the  Government,  that  taxation  shall  be  equal 
and  uniform,  and  that  each  citizen  of  the  Commonwealth  shall  bear  his  just 
proportion  of  the  public  burdens.  At  the  instance  of  the  mine-owners,  and 
by  their  intrigue  and  threats,  the  constitutional  convention  so  far  sacrificed 
this  just  principle  as  to  wholly  exempt  from  taxation  the  mines,  the  most 
valuable,  most  productive,  and  most  considerable  property  interest  in  this 
State — vesting  in  the  Legislature  the  power  to  tax  the  proceeds  alone. 

."When  the  first  Legislature  convened  under  the  constitution,  the  friends 
of  equal  taxation  attempted,  in  conformity  with  the  letter  and  spirit  of  the 
constitution,  to  impose  the  same  rate  of  taxation  upon  the  proceeds  of  mines 
as  upon  other  property.  But  their  efforts  were  met  and  thwarted  by  the 
same  spirit  of  intrigue  and  domination  that  have  procured  the  exemption  of 
the  mine  itself ;  until  in  the  face  of  the  constitution  twenty  dollars  were 
deducted  from  the  gross  yield  per  ton,  and  a  tax  levied  on  seventy-five  per 
cent  only  of  what  remained.  This  effort  was  renewed  in  the  Legislature  of 
1866  with  similar  results.  In  1867  the  burthen  of  taxation  falling  heavily 
upon  the  people,  the  treasury  depleted,  the  State  heavily  in  debt,  with  no 
power  to  borrow,  and  no  credit  to  borrow  on  if  the  power  had  existed,  when 
bankruptcy  stared  us  in  the  face  and  fears  were  seriously  expressed  respect- 
ing the  success  and  permanent  existence  of  the  State  Government,  the 
friends  of  equal  taxation  again  attempted  to  impose  taxation  upon  the  pro- 
ceeds of  mines  in  accordance  with  the  provisions  of  the  constitution.  When 
the  Legislature  convened  there  was  scarcely  one  of  the  fifty-four  members 
who  did  not  favor  the  proposition.  Notice  of  intention  to  introduce  the  bill 
had  scarcely  been  given  when  a  swarm  of  mine-owners,  mining  superinten- 
dents, and  persons  in  their  interest  besieged  the  Legislature  with  such  deter- 
mination and  persistency  as  to  prevent  the  passage  of  any  revenue  law 
during  that  session,  thus  necessitating  an  extra  session  at  a  coat  of  tiO,000 
to  the  State. 

"In  the  extra  session  the  contest  was  again  renewed  by  the  employment  of 
the  same  devices  and  by  resort  to  the  same  intrigue ;  until  when  the  session 
was  about  to  expire,  the  honest  advocates  of  just  taxation  were  again  forced 
to  sacrifice  principle  by  an  odious  discrimination  in  limiting  the  tax  upon 
the  mines  for  county  purposes  to  twenty-five  cents  on  each  one  hundred 


TAXATION  OF  MIXES  81 

The  Legislature  of  1869  enacted  no  important  general 
legislation  relative  to  taxation  of  proceeds  of  mines, 
excepting  that  all  taxes  were  made  assessable  and  payable 
in  coin  only.  The  Supreme  Court  decision  of  1867  had 
removed  one  issue  from  the  domain  of  legislation  and 
the  new  issues  were  not  as  yet  sufficiently  well  defined 
to  precipitate  a  contest.  Probably  both  sides  were 
anxious  to  keep  this  question  in  the  background  in  the 
interest  of  other  legislation,  some  of  which  was  concerned 
with  the  taxation  of  the  new  Central  Pacific  Railway, 
and  some  of  which  provided  for  county  aid  to  the  con- 
struction of  the  Virginia  and  Truckee  Railway  connect- 
ing the  mines  of  the  Comstock  with  Carson  City  and 
the  valley  of  the  Carson  River  where  the  reduction  plants 
were  located.1  The  tendency  to  favor  the  mining  inter- 
ests is  disclosed  in  a  few  minor  instances  only — in  a  pro- 
vision of  the  city  charter  of  Hamilton  exempting  the 
proceeds  of  mines  from  municipal  taxation,  and  in  the 
partial  exemption  of  the  proceeds  of  mines  in  Storey 
County  from  county  taxation.  This  last  arrangement 
acquired  new  significance  through  the  bonding  of  that 
county  in  aid  of  railroad  construction. 

The  Legislature  of  1871  enacted  some  important 
amendments  to  the  revenue  act  modifying  the  procedure 
of  Assessors  in  determining  the  value  of  the  proceeds  of 

dollars  valuation,  and  deducting  from  the  gross  yield  of  wet-process  ores 
eighteen  dollars  per  ton — an  amount  largely  in  excess  of  the  actual  cost 
of  reduction.  This  discrimination,  so  unjust  to  the  general  taxpayers  of  the 
State,  and  so  partial  to  the  mine-owners,  was  accepted  by  the  latter  as  a 
satisfactory  compromise,  and  it  was  hoped  and  believed  this  compromise,  at 
least,  would  be  observed  in  good  faith."  (4  Nev.  183.) 

'A  few  years  later  this  railroad  was  extended  to  Reno,  where  it  formed  a 
junction  with  the  Central  Pacific  Railroad,  but  such  extension  was  not  a 
condition  for  the  receipt  of  county  aid.  See  Statutes  of  Nevada,  1869,  p.  163. 


82  7M.V.I770.Y    /.V   \KVADA 

mines.  Since  1866  the  Governor  and  the  State  Con- 
troller had  been  urging  certain  changes  designed  to 
secure  a  more  just  valuation.1  Their  idea  was  to  fix  the 
value  of  the  proceeds  at  the  value  of  the  bullion  less  the 
actual  cost  of  extraction  and  reduction.  This  was 
expected  to  increase  the  state  revenue  since,  in  the  case 
of  the  most  productive  mines,  the  arbitrary  allowance  of 
eighteen  dollars  a  ton  of  the  law  of  1867  was  considered 
excessive,  and,  at  the  same  time,  it  was  calculated  to  be 
advantageous  to  the  owners  of  small  remote  mines  where 
the  expenses  of  operation  were  unusually  high  and  where 
the  eighteen-dollar  allowance  was  less  than  the  actual 
cost  of  extraction  and  reduction.  Here  for  the  first  time 
the  principle  of  making  an  allowance  for  the  cost  of 
mining  is  recognized.  This,  of  course,  was  favorable  to 
the  mine  owners,  but  it  was  recommended  by  the  Gov- 
ernor as  an  act  of  simple  justice,  not  as  a  compromise. 
It  is  a  testimonial  to  the  fair-mindedness  of  Governor 
Blasdel  that,  while  his  idea  was  adopted  only  in  part  by 
the  Legislature  of  1871,  it  was  later  more  fully  embodied 
in  the  law  by  a  series  of  amendments  and  has  served  for 
many  years  as  the  basis  of  our  laws  on  the  taxation  of 
the  proceeds. 

The  provision  of  the  act  of  1871  are  as  follows  :2  The 
value  of  the  taxable  proceeds  of  a  mine  was  to  be  deter- 
mined by  subtracting  from  the  gross  value  of  the  bullion 
an  amount  equal  to  the  actual  cost  of  mining,  transporta- 
tion, and  reduction,  provided  that  these  costs  should  not 
exceed  a  certain  arbitrarily  graduated  percentage  of  the 

'Governor's  Message,  1869,  p.  6 ;    Controller's  Report  for  1868,  p.  7. 
'Statutes  of  Nevada,  1871,  p.  87. 


TAXATION  OF  MINES  83 

value  of  the  bullion  recovered.     The  maximum  exemp- 
tions were  as  follows : 

For  ores  yielding  $12  or  less  per  ton,  90%. 

For  ores  yielding  $12  to  $30  per  ton,  80%. 

For  ores  yielding  $30  to  $100  per  ton,  60%. 

For  ores  yielding  over  $100  per  ton,  50%. 
There  was  an  additional  maximum  exemption  of  fifteen 
dollars  a  ton  for  ores  treated  by  the  Freiburg  process. 

The  provision  limiting  the  returnable  costs  to  a  certain 
percentage  of  the  value  of  the  ore  was  intended,  appar- 
ently, to  prevent  the  doctoring  of  cost  accounts  and 
doubtless  was  of  some  effect  where  the  ore  yielded  but 
little  profit.  The  per  cent  of  exemptions  permitted  in 
the  case  of  the  better  ores  was  so  high  as  to  fail  of  its 
desired  effect.  Indeed,  it  is  probable  that  the  statement 
of  a  maximum  limit  encouraged  mining  operators  to 
return  costs  nearly  up  to  the  limit  and  without  much 
reference  to  actual  costs.  Figures  cited  in  Governor 
Bradley 's  biennial  message  (1875)  show  that  during  the 
first  three  years  of  the  operation  of  this  law  the  amount 
of  proceeds  assessed  for  taxation  for  a  certain  mine  was 
equal  to  fifty-seven  per  cent  of  the  gross  yield,  the  cost 
exemptions  being  forty-three  per  cent,  whereas  on  the 
basis  of  true  costs,  the  cost  exemptions  should  have  been 
only  about  thirty  per  cent.1  From  October  1,  1875,  to 
September  30,  1878,  the  value  assessed  for  taxation  was 
over  fifty-six  per  cent  of  the  bullion  value  and  the  aver- 
age exemption  for  costs  amounted  to  over  $26  a  ton — an 
amount  nearly  fifty  per  cent  larger  than  was  allowed 
under  former  law.2 

'Biennial  Message  of  the  Governor,  1875,  p.  10. 
=Report  of  Controller  for  1876.  p.  100. 


84  5r.4JT.ir/ow  IN-XEVADA 

The  total  effect  of  this  law  was  to  increase  the  taxes 
paid  on  ores  yielding  little  or  no  profit,  while  the  more 
profitable  ores  paid  less  than  before.  On  the  whole,  the 
State  received  less  revenue  and  the  big,  profitable  mines 
secured  important  advantages.  The  law  was  right  in 
principle,  but  weak  from  the  administrative  standpoint ; 
but,  in  spite  of  this  victory  of  the  big  mining  interests, 
the  revenues  from  the  proceeds  of  mines  were  very 
greatly  increased  during  the  next  seven  years,  thanks  to 
the  wonderful  productivity  of  a  few  rich  mines  and  to  the 
law  of  1867  requiring  that  the  rate  be  the  same  on  the 
proceeds  of  mines  as  on  other  property. 

In  1877  the  provision  of  the  act  of  1871  fixing  maxi- 
mum cost  exemptions  was  modified  so  that  it  did  not 
apply  to  mines  producing  one  ton  or  less  of  ore  a  day1 ; 
and,  in  1885,  the  provision  was  repealed  altogether,  leav- 
ing the  requirement  that  the  net  proceeds  be  taxed  and 
defining  net  proceeds  as  the  gross  returns  less  the  actual 
cost  of  mining,  transportation,  and  reduction.2  Thus  was 
the  recommendation  of  the  first  Governor  made  into  law, 
but  by  this  time  it  was  a  matter  of  less  importance,  since 
but  little  ore  was  being  produced  and  most  of  that  little 
at  small  profit. 

In  the  opinion  of  the  Supreme  Court  in  the  case  of 
Nevada  v.  Estabrook,  it  was  held  that  all  ad  valorem  taxes 
must  be  levied  at  the  same  rate.  While  this  particular 
case  does  not  involve  the  question  of  local  taxation,  the 
opinion  was  set  forth  in  terms  sufficiently  broad  and  gen- 
eral to  cover  local  as  well  as  state  taxes.  It  appears, 
however,  that  for  a  number  of  years  neither  the  Legisla- 

'Statutes  of  Nevada,  1877,  p.  175-6. 
-Statutes  of  Nevada,  1886,  p.  49. 


TAXATION  OF  MIXES  85 

ture  nor  the  local  administrative  officials  of  Storey 
County  paid  any  attention  to  this  aspect  of  the  opinion. 
In  1869  the  proceeds  of  mines  were  exempted  from  city 
taxation  by  special  legislative  act.1  That  provision  of 
the  revenue  act  of  1867  which  fixed  the  rate  of  tax  for 
county  purposes  on  the  proceeds  of  mines  in  Storey 
County  at  25  cents  on  the  hundred  dollars,  while  other 
taxes  could  be  levied  at  $1.50  a  hundred,  remained  on  the 
statute  book  until  1875  and  was  adhered  to  in  the  inter- 
vening years.2  The  amendment  of  1875,  while  it  repealed 
the  specific  provision  above  mentioned,  did  not,  in  set 
terms,  require  that  the  rate  should  be  the  same  on  all 
property,  and  the  Board  of  County  Commissioners  of 
Storey  County,  ignoring  the  opinion  of  the  Supreme 
Court,  adopted  a  strained  interpretation  of  the  law 
which  made  the  rate  discretionary  and  fixed  the  county 
tax  rate  at  35  cents  for  the  proceeds  of  mines  and  $1.35 
for  other  property. 

There  had  been  an  ambiguity  in  the  law  relating  to 
local  school  taxes  from  the  beginning  of  state  legislation, 
and  apparently  this  ambiguity,  while  removed  by  the 
court  opinion  previously  mentioned,  had  been  wrongly 
interpreted  by  the  local  officers  in  such  a  way  as  to 
exempt  the  proceeds  of  mines  from  local  school  taxes.  A 
similar  situation  existed  in  connection  with  the  special 
railroad  bond  tax  of  Storey  County  and  this  exemption 
was  the  more  strikingly  unjust  because  of  the  peculiar 
circumstances  under  which  these  bonds  were  issued.  The 
direct  economic  advantages  derived  from  the  building 

'Statutes  of  Nevada,  1869,  p.  163-4. 

-Biennial  Message  of  Governor,  1875,  p.  11,  and  report  of  Controller  for 
1874,  p.  94-99. 


86  TAXATION  IN  NEVADA 

of  the  Virginia  and  Truckee  Railroad  lay  almost  wholly 
with  the  mine  owners.  Through  its  construction  the 
costs  of  mine  operation  were  greatly  reduced  because  of 
the  reduced  expenses  for  transportation  of  ores,  of  fuel, 
mining  timbers,  machinery,  and  all  other  materials. 
Moreover,  the  chief  owners  and  promoters  of  the  railroad 
were  the  men  who  were  most  prominently  connected  with 
the  mining  interests,  and  one  would  not  be  far  wrong 
in  saying  that  these  big  mine  owners  were,  in  the  con- 
struction of  this  railroad,  building  an  addition  to  their 
mining  equipment.  Under  these  circumstances  there 
was  no  good  reason  why  the  public  should  have  been 
taxed  in  aid  of  the  road  except  that  public  aid  for  rail- 
road building  was  fashionable  at  that  time,  in  some  cases 
being  justified  by  considerations  of  public  policy. 

But  this  grant  of  $300,000  aid  to  the  mine  owners  who 
were  building  themselves  a  railroad  is  the  more  astonish- 
ing when  one  learns  that  the  grant  was  made  under  laws 
which  exempted  most  of  the  property  of  the  chief  bene- 
ficiary from  the  taxes  necessitated  by  reason  of  this  aid. 
The  aid  was  extended  in  1869-70  by  means  of  two  issues 
of  bonds  amounting  to  $300,000,  bearing  seven  per  cent 
interest  and  payable  in  six,  ten,  and  fifteen  years;  to 
meet  these  payments  a  tax  was  levied  on  all  property 
except  the  proceeds  of  mines — this,  too,  in  face  of  the 
opinion  of  the  Supreme  Court  (1867)  that  all  ad  valorem 
taxes  must  be  equal. 

Finally  in  1875  application  was  made  to  the  Supreme 
Court  for  a  writ  to  compel  the  levy  of  all  of  these  local 
taxes  in  Storey  County  in  accordance  with  the  constitu- 
tional requirement  and,  while  the  writ  was  denied  on  a 


TAXATION  OF  MINES  87 

technicality,  the  opinion  of  the  court  sustained  the  major 
contention  of  the  petitioners  that  these  taxes  should  be 
levied  uniformly  as  to  rate  on  the  proceeds  of  mines  as 
well  as  on  other  property.1 

During  the  whole  earlier  period  of  active  mining 
development  in  which  the  mines  of  Virginia  City  figured 
most  largely,  the  question  of  taxation  in  relation  to 
mines  was  one  of  controversy,  in  the  Legislature,  in  the 
constitutional  conventions,  in  the  elections,  in  the  Asses- 
sor's office,  and  in  the  courts,  and  the  controversy  was 
often  marked  by  great  persistency  and  bitterness.  Dur- 
ing the  more  recent  period  of  mining  activity  in  which 
the  mines  of  Tonopah,  Goldfield,  and  Ely  have  been  most 
prominent  there  has  been  comparatively  little  contro- 
versy on  this  question.  It  would  appear  that  out  of  the 
battles  of  the  former  period  the  people  have  evolved  a 
system  of  taxation  for  the  proceeds  of  mines  which,  if 
not  ideally  just,  is  at  least  practicably  workable  and 
about  abreast  with  public  opinion.  Doubtless  the  great 
increase  in  property  values  generally  in  the  last  thirty 
years  has  made  the  people  more  careless  about  the  ques- 
tion of  mining  taxes.  On  the  other  hand,  the  mines  have, 
in  the  main,  paid  their  taxes  under  the  existing  laws  at 
the  regular  ad  valorem  rate  without  litigation  involving 
important  principles.  They  have  paid  the  regular  ad 
valorem  rate  for  state  and  local  purposes  and,  in  return- 
ing the  net  proceeds,  it  does  not  appear  that  they  have 
been  guilty  of  greater  evasions  than  some  other  important 
property  interests. 

A  few  recent  minor  changes  in  the  laws  should  be 

'11  Nev.  235. 


>s  TAXATION  IN  NEVADA 

mentioned.  In  1891  the  mode  of  computing  costs  of 
operation  was  made  more  definite  by  a  provision  to  the 
effect  that  in  computing  expenses  no  account  shall  be 
taken  of  expenses  incurred  previous  to  the  quarter  for 
which  the  assessment  is  made  except  in  the  case  of  mines 
producing  less  than  one  ton  of  ore  a  day,  in  which  case 
the  expense  for  previous  quarters  within  the  space  of  a 
year  may  be  counted.1  In  1905  the  office  of  State  License 
and  Bullion  Tax  Agent  was  provided  for,  and  to  the 
activity  of  this  officer  (1905-1913)  the  more  effective 
working  of  the  old  law  may  be  attributed  in  a  large 
degree.2 

In  1913  the  Legislature  conferred  upon  the  newly 
created  Tax  Commission  the  power  to  determine  the  value 
of  the  net  proceeds  of  mines,  particularly  enjoining  the 
commission  not  to  permit  of  any  excessive  deductions 
for  transportation  or  reduction  introduced  to  defraud 
the  State  of  its  just  revenue.  Acting  under  its  ample 
authority  the  commission  is  meeting  with  success.  The 
commission  in  its  efforts  to  secure  uniformity  in  assess- 
ments has  adopted,  temporarily,  a  procedure  which  illus- 
trates the  difficulty  involved  in  passing  from  an  old 
system  of  underassessment  to  a  more  perfect  system 
when  the  constitution  and  the  laws  are  excessively  rigid. 
After  determining  the  actual  value  of  the  net  proceeds  of 
a  mine  for  a  given  quarter,  the  commission  fixes  the  value 
for  assessment  purposes  at  some  per  cent  of  this  actual 
value — 70  per  cent  in  19 15.3  This  is  to  correspond  with 
an  estimated  similar  undervaluation  of  other  property. 

'Statutes  of  Nevada,  1891,  p.  162. 
-Statutes  of  Nevada,  1905,  p.  226. 
•''See  3  Nev.  179. 


TAXATION  OF  MIXES  89 

Now  it  is  doubtless  true  that  other  property  is  under- 
valued, but  there  is  at  least  a  possibility  for  an  Assessor 
to  regard  the  assessed  value  of  other  property  as  the 
actual  value  in  most  cases,  because  there  is  a  contingent 
element  in  the  determination  of  value.  For  example, 
the  value  of  a  farm  or  a  stock  of  goods  may  be  much  less 
than  it  is  ordinarily  considered  to  be.  One  can  be  cer- 
tain of  the  value  only  after  selling  it.  But  in  case  of 
the  net  proceeds  of  mines  there  is  no  such  contingency, 
and  hence  the  Assessor  cannot  possibly  believe  the  value 
of  the  net  proceeds  to  be  only  70  per  cent  of  the  actual 
value.  It  is  all  a  matter  of  history.  The  bullion  has 
been  produced,  the  costs  have  been  paid,  the  product 
marketed,  and  the  account  closed.  The  actual  net  pro- 
ceeds are  certain  and  there  is  no  ground  on  which  they 
can  be  scaled  down  for  risk  or  future  contingency.  It  is 
the  policy  of  the  Tax  Commission  to  advance  all  valua- 
tions gradually  until  they  conform  to  actual  values, 
and  not  until  this  is  accomplished  will  it  be  possible  to 
be  wholly  consistent. 

It  is  probable  that  since  1867  the  taxes  on  the  proceeds 
of  mines  for  state  purposes  have  been  assessed  and  col- 
lected with  as  much  efficiency  as  have  most  other  taxes, 
and  the  same  may  be  said  as  to  local  taxes  since  1876.  It 
is  true  that  mine  owners  have  evaded  some  of  their  taxes 
through  the  device  of  reporting  excessive  costs  of  mining, 
transportation,  and  reduction,  and  that,  in  a  few  cases, 
profitable  mines  have  by  this  device  almost  escaped  taxa- 
tion, but  it  is  also  true  that  owners  of  other  taxable  prop- 
erty have  evaded  taxes  by  understatements  of  value  or 
quality.  On  the  whole,  there  is  reason  for  believing  that 


90  TAXATION  7.Y  NEVADA 

since  the  creation  of  the  office  of  State  License  and 
Bullion  Tax  Agent  in  1909  the  evasions  have  been  even 
smaller  in  the  case  of  the  mines  than  in  the  case  of  some 
other  important  classes  of  property,  and  there  is  a  degree 
of  probability  that  the  same  was  true  for  a  much  longer 
period,  a  few  remote  mines  excepted.  It  seems  highly 
probable  that,  with  the  exception  of  the  years  1865  and 
1866  and  with  a  further  exception  extending  to  1875  in 
the  case  of  local  taxes  in  Storey  County,  the  taxes  paid 
on  the  proceeds  of  mines  have  constituted  about  as  high 
a  proportion  of  the  total  revenue  as  should  be  expected 
under  the  present  constitution. 

It  may  be  well  to  consider  on  its  merits  the  chief 
question  of  controversy  in  the  constitutional  convention 
and  of  the  early  period  of  statehood.  Do  the  mining 
interests  pay  their  fair  share  of  the  taxes  as  compared 
with  the  one  other  basic  industry  of  the  State — agricul- 
ture and  stock  raising?  During  the  entire  history  of 
the  State  the  proceeds  of  mines  have  paid  directly  less 
than  fifteen  per  cent  of  the  state  ad  valorem  taxes,  and 
in  the  last  ten  years,  a  period  of  large  scale  and  profit- 
able mining,  they  have  paid  less  than  eight  per  cent. 
This,  of  course,  does  not  represent  the  entire  tax  paid 
by  the  mining  interests,  since  the  mining  equipment, 
including  operating  machinery  and  reduction  plants,  is 
assessed  and  taxed  like  other  property.  Moreover,  some 
part  of  the  taxes  paid  by  the  business  interests  of  mining 
camps  and  by  railroad  and  other  public-service  cor- 
porations which  serve  the  mining  camps  is  shifted  to 
the  mines  in  the  form  of  higher  wages  and  higher  prices 
for  materials  and  transportation. 


TAXATION  OF  MINES  91 

The  data  necessary  to  a  determination  of  the  taxes 
paid  on  various  classes  of  property  are  more  fully  avail- 
able for  1916  than  for  any  previous  year.  In  that  year 
the  valuations  taxable  to  the  mining  interests  were  as 
follows  :* 

1.  Net  proceeds  of  mines $14,8<50,569 

2.  Mine  improvements  and  mills 9,207,290 

3.  Patented  mining  claims 2.187,843 


Total $20,315,708 

For  the  same  year  the  valuations  taxable  to  the  agri- 
cultural interests  were  as  follows : 

Land2  $23.507.276 

Live  stock3 14,300,000 

Other  property,  buildings,  etc 2,172,805 

Personal  property — farm  machinery,  etc 1,222,362 


Total $41.262,503 

According  to  these  figures  the  agricultural  interests 
paid  about  23.7%  of  the  state  ad  valorem  taxes,  while 
the  mining  interests  paid  15%.  Moreover,  this  was  a 
year  of  unusually  large  net  proceeds  of  mines  because  of 
the  high  prices  prevailing  for  silver  and  copper,  and 
hence  we  may  assume  that  the  relative  amount  of  taxes 
paid  by  the  mining  interests  has  averaged  even  less  than 
for  1916.  It  is  probable  that  the  taxes  which  are  shifted 
from  other  property  to  these  two  basic  industries  in  the 
form  of  wages,  costs  of  materials,  and  transportation 
rates  are  important  to  the  question,  but  there  is  no  means 
of  determining  the  relative  amounts  so  shifted.  But 
since  the  two  industries  employ  approximately  equal 

1  Based  on  data  found  in  the  report  of  the  Tax  Commission  and  in  that 
of  the  State  Controller  for  1916. 
'-'Railroad  grant  land  not  included. 
3  After  making  deductions  for  animals  owned  in  cities  and  towns. 


92  TAXATION  7-V  NEVADA 

numbers  of  workers,1  and  since  both  export  their  prod- 
ucts and  import  most  consumption  goods  and  equipment, 
there  is  no  ground  for  assuming  any  marked  inequality 
in  this  respect.  Perhaps  the  excess  lies  to  some  extent 
on  the  side  of  the  mines  so  that  after  making  due  allow- 
ance for  this  shifted  tax  the  mines  may  have  paid  from 
two-thirds  to  three-fourths  as  large  a  state  tax  as  have 
the  farm  and  livestock  interests. 

Whether  this  constitutes  a  fair  apportionment  of  the 
burden  of  taxation  as  between  these  two  basic  industries 
is  not  easily  determined — is  not  determined  with  a  high 
degree  of  certainty  such  as  to  command  universal 
assent — but  certain  considerations  indicate  that  for  a 
period  of  great  prosperity,  the  taxes  paid  by  the  mining 
interests  have  been  too  low  as  compared  with  those  of 
the  farmer.  The  cost  of  government  incident  to  the 
existence  of  a  mining  population  is  probably  not  less 
per  worker  than  for  an  agricultural  community  and 
there  are  about  fourteen  per  cent  more  workers  engaged 
in  mining  than  in  agriculture.2  Apparently  the  benefit 
of  government  is  not  less  for  a  mining  community  in 
proportion  to  the  population  than  for  a  farm  com- 
munity. The  ability  of  the  mining  interests  to  pay  can- 
not be  considered  inferior  to  that  of  the  farm  interests 
when  one  reflects  that  in  recent  years  the  gross  value  of 
mineral  products  has  averaged  approximately  twice  as 
great  as  that  of  the  farm  and  livestock  products.  Indeed, 
the  aggregate  net  profits  of  mining  for  some  recent  years 

'According  to  the  census  of  1910,  there  were  in  the  State  9,834  persons 
whose  occupation  was  the  extraction  of  minerals,  and  8,770  whose  occupa- 
tion was  agriculture. 

•'U.  S.  Census  of  Occupations,  1910. 


TAXATION  OF  MIXES  93 

have  been  greater  than  the  gross  receipts  of  farm  and 
stock  interests. 

Furthermore,  the  net  income  from  mining  represents 
the  gift  of  nature  and  society  as  largely  and  as  truly  as 
does  that  of  agriculture,  and  the  miner  through  his 
operations  impoverishes  the  State  through  the  depletion 
of  its  natural  resources  without  leaving  lasting  improve- 
ments of  relatively  great  value,  while  farming  ordinarily 
conserves  more  fully  the  interests  of  society  through  the 
creation  of  improvements  which  render  the  land  per- 
manently more  useful  to  mankind. 

In  the  constitutional  convention  and  in  the  later  con- 
troversies there  was  advanced  an  argument  for  giving 
the  mines  special  consideration  which  was  in  part  valid 
and  in  part  erroneous.  In  general,  the  argument  runs 
as  follows:  Mining  operations  are  accompanied  by 
unusual  risk.  Most  enterprises  result  in  a  net  loss.  In 
the  case  of  a  successful  mine  there  is  a  period  of  doubt 
and  uncertainty  when  the  miner  has  not  property  but 
only  hope.  Sometimes  there  is  a  long  period  of  small 
production  just  on  the  border  line  between  profit  and 
loss.  If  there  is  to  be  any  precious-metal  mining  at  all, 
these  prospectors  and  hoping  investors  must  be  encour- 
aged to  continue  their  operations,  since  all  old  mines 
cease  to  be  productive,  and  only  by  the  constant  discovery 
of  new  bodies  of  ore  can  the  mining  industry  continue 
prosperous.  Now  society  properly  gives  the  industry 
encouragement  by  exempting  the  mine  from  taxation 
until  it  is  earning  a  net  profit"  above  the  cost  of  opera- 
tion and  by  taxing  the  profit  at  a  low  rate.  If  certain 
lucky  investors  secure  fabulous  profits,  such  gains  serve 


94  TAXATION  IN  NEVADA 

a  public  purpose  in  stimulating  the  prospectors  and 
investors  in  unproven  enterprises.  If  through  such 
encouragement  mining  is  aided  so  that  it  is  prosperous, 
it  will  contribute  to  the  general  prosperity  of  the  State 
by  furnishing  occupation  for  labor,  by  creating  profit- 
able markets  for  hay  and  other  farm  produce,  and  by 
stimulating  business  activity  generally. 

The  validity  of  the  argument  may  be  admitted  in  so  far 
as  the  following  points  are  concerned : 

1.  The  business  is  accompanied  by  unusual  risks,  and 
there  must  be  a  possibility  of  large  gains  in  order  to 
induce  men  to  assume  these  risks. 

2.  The    general    business    prosperity    of    Nevada    is 
advanced  by  mining  activity,  although  the  dependence 
is  not  so  great  as  in  earlier  years. 

3.  As  long  as  the  development  of  mineral  resources 
is  secured  through  private  enterprise,  special  encourage- 
ment should  be  given  to  the  prospector  and  the  men 
who   invest   their   capital   in   the   development   of   new 
mines.     It  would  be  well  to  go  even  further  than  the 
present  law  does  by  exempting  equipment  for  develop- 
ment work  where  not  carried  on  in  connection  with  prof- 
itable operations.     So  much   may   be   conceded  to  the 
necessity  of  encouraging  a  hazardous  business. 

But,  taking  into  consideration  not  only  the  mines  that 
fail,  but  those  which  are  superlatively  rich,  it  appears 
that  the  industry,  as  a  whole,  is  well  able  to  bear  its 
proportionate  share  of  the  cost  of  government.  The 
difficulty  has  arisen  from  the  lack  of  a  system  which 
would  adjust  the  burden  properly.  The  improperly 
adjusted  burden  is  all  too  heavy  in  the  case  of  the  mine 
whose  gross  proceeds  are  never  sufficient  to  pay  the 
whole  expense  of  development  and  operation,  but  which 


TAXATION  OF  MIXER  95 

is  taxed  on  the  so-called  "net  proceeds"  of  a  few  quar- 
ters during  which  the  best  ore  is  being  removed.  On 
the  other  hand,  a  much  higher  rate  of  tax  could  be  paid 
easily  by  a  mine  rich  in  high-grade  ore,  and  where  mil- 
lions of  profit  are  made  ^on  the  basis  of  a  relatively 
small  investment.  It  is  good  public  policy  to  encourage 
prospecting  and  the  development  of  mining  claims  of 
unproved  value  by  exempting  such  prospects  and  claims 
from  taxation  while  the  character  of  the  property  is 
being  tested.  Since  the  State  maintains  government  for 
this  tax-exempt  property  and  schools  for  the  benefit  of 
the  mining  population,  it  amounts  to  a  bounty  on  devel- 
opment work,  and,  in  this  sense,  mining  is,  for  a  time 
at  least,  a  subsidized  industry.  The  State  shares  the  risk, 
and  in  many  cases  both  the  mine  owner  and  the  State 
are  losers.1 

But  if  it  is  right  for  the  State  to  share  in  the  hazards 
and  losses  of  the  mining  industry,  it  is  also  right  for  it 
to  share  in  its  good  fortune.  In  short,  the  tax  on  the 
proceeds  of  mines  should  be  graduated  with  full  exemp- 
tion for  all  development  costs  and  with  a  low  rate  for 
the  mines  which  yield  little  in  proportion  to  total  costs, 
but  with  an  increasing  rate  according  to  the  richness  of 

'A  cerjtain  small  mining  camp  called  into  existence  by  a  mine  which  had 
been  operated  for  about  ten  years,  but  which  had  not  made  good,  had  a 
Justice  of  the  Peace  and  a  Constable  maintained  at  the  expense  of  the 
county,  and  a  public  school  maintained  largely  at  county  expense.  Prob- 
ably the  county  was  to  some  expense  for  crime,  litigation,  and  road  main- 
tenance on  account  of  the  camp,  but  omitting  these  items  and  including 
only  expenditures  for  the  Justice  of  the  Peace,  the  Constable,  the  school, 
and  the  election,  the  county  made  expenditures  for  this  camp  during  a 
certain  typical  year  amounting  to  a  sum  more  than  ten  times  as  great 
as  the  county  taxes  paid  by  the  camp.  Naturally  the  taxes  were  small 
because  the  land  was  of  trifling  value,  the  houses  were  mere  shacks,  the 
mining  equipment  was  worth  but  little  more  than  its  value  as  junk,  and 
there  were  no  net  proceeds. 


()fj  TAXATION  I\  XEYADA 

the  mine.  Such  a  tax  would  be  more  nearly  just  than 
the  present  from  every  point  of  view  and  would  serve 
even  better  than  the  present  tax  to  encourage  mining 
at  the  stage  where  encouragement  is  most  needed.  The 
tax  must  not  be  so  high  as  to  prevent  the  creation  of 
great  fortunes  under  the  most  favorable  conditions,  but 
it  may  be  high  enough  to  permit  the  State  to  share  in  the 
good  luck  of  the  fortunate  few.  If  there  were  a  special  tax 
on  the  net  proceeds  of  mines  graduated  according  to  the 
profitableness  of  the  enterprise,  even  a  very  high  rate  on 
the  richest  mines  would  not  discourage  operation  and, 
what  is  more,  it  would  not  destroy  the  effect  of  such 
instances  in  encouraging  the  poor  prospector  and  the 
hopeful  investor.  Lake  Michigan,  to  a  man  standing  on 
the  shore,  appears  to  be  about  as  large  as  the  Pacific 
Ocean.  A  chance  to  make  a  million  dollars  has  about 
the  same  stimulating  effect  on  the  mind  of  the  average 
man  as  a  chance  to  make  ten  million.  Since  the  high  tax 
would  be  paid  only  by  the  very  fortunate  mine  owner, 
no  one  would  fear  it  in  advance.  All  would  hope  for  the 
opportunity  to  pay  it.  Moreover,  the  mine  should  pay 
an  excess  of  tax  in  the  period  of  its  prosperity  to  cover 
in  part  the  cost  of  government  during  the  later  period 
when  it  may  be  operated  at  little  or  no  profit  and,  when, 
consequently,  it  fails  to  pay  its  way  governmentally,  and 
to  cover  the  cost  of  maintaining  the  insane,  the  paupers, 
and  convicted  criminals  who  may  remain  public  charges 
after  the  camp  that  furnished  them  has  been  deserted,  or 
after  it  has  lost  its  ability  to  pay  taxes.1 

'An  extreme  instance  of  an  old  unprofitable  mining  camp  failing  to  pay 
its  way  governmentally  is  afforded  by  a  certain  county  containing  such  a 
mining  camp  and  very  small  population  outside  of  the  mining  district.  In 


TAXATION  OF  MINES  97 

It  is  never  possible  for  a  system  of  taxation  to  be  gov- 
erned wholly  by  strict  theoretic  considerations.  It  must 
be  adapted  to  the  political  and  social  ideas  of  the  time 
and  must  be  capable  of  enforcement  through  existing  or 
attainable  administrative  agencies.  Possibly  the  system 
of  taxation  of  1867-1880  was  about  as  good  as  was 
possible  for  those  days — considering  the  state  of  public 
intelligence  on  the  subject  of  taxation,  the  biases,  the 
prejudices,  the  special  interests,  the  weakness  of  human 
nature,  the  rather  inefficient  administrative  machinery 
of  government,  the  strong  spirit  of  individualism,  and 
the  unusual  features  of  the  economic  situation.  The 
State  Controller  evidently  had  some  such  considerations 
in  mind  when  he  wrote  in  1876  that  our  system  of  taxing 
the  proceeds  of  mines  was  as  nearly  just  as  any  system 
that  would  yield  any  revenue  at  all.1 

But  Nevada  has  made  progress  in  the  direction  of 
economic  stability  and  political  efficiency  since  that  time, 
and  it  is  highly  probable  that  the  State  will  be  able  in 
the  next  score  of  years  to  modify  its  system  of  taxation 
in  the  direction  of  a  more  exact  justice,  and  to  administer 
such  a  system  effectively.  If  the  question  of  such  read- 
justment should  receive  practical  attention,  the  change 
from  the  old  to  a  better  new  system  might  be  facilitated 
by  making  the  new  law  apply  only  to  new  enterprises. 

a  recent  year  this  county  received  as  its  share  of  the  state  school  money 
a  sum  almost  twice  as  great  as  it  paid  in  state  taxes.  At  the  same  time 
the  State  was  maintaining  in  the  State  Hospital  for  the  Insane  twenty-seven 
inmates  committed  from  that  county. 

'Report  of  the  State  Controller,  1874,  p.  10. 


98  TAXATION  IN  NEVADA 

MORAL  ASPECTS 

There  is  a  moral  aspect  to  all  questions  of  taxation, 
but  the  moral  question  is  not  so  simple  as  it  seems  to  be 
to  the  average  man  who  has  given  the  question  a  little 
thought.  There  is  some  tendency  in  the  popular  dis- 
cussion of  the  subject  to  maintain  the  view  that  the  real 
problem  is  almost,  if  not  wholly,  one  of  honesty — how  to 
get  men  to  adopt  a  constitution  whose  provisions  are 
dictated  by  considerations  of  public  interest  and  not  of 
private  greed,  how  to  get  honest  legislators,  honest  admin- 
istrative officials,  honest  courts,  honest  taxpayers. 

The  view  here  taken  is  that  it  is  not  altogether  a 
matter  of  honesty,  but  largely  one  of  public  intelligence. 
If  the  people  once  clearly  see  things  as  they  are,  the 
number  who  will  oppose  right  action  through  dishonest 
motives  will  be  far  too  small  to  be  effective.  Without 
this  general  intelligence  necessary  to  wise  public  action, 
it  is  probable  that  some  of  the  most  honest  and  well-meant 
individual  efforts  toward  the  right  would  fail  to  work 
in  the  direction  of  real  justice. 

Looking  at  the  whole  question  of  mining  taxes  from 
this  point  of  view,  I  would  say  that  the  conduct  of  the 
mine  owners  in  paying  as  little  tax  as  possible  does  not 
call  for  any  unusual  moral  reprobation.  They  were 
just  about  like  the  rest  of  us.  It  is  a  commonplace  that 
if  taxes  can  be  evaded  they  are  not  paid.  The  mining 
interests  of  the  early  history  of  the  State  enjoyed  some 
unusual  advantages.  They  were  strong,  and  in  the  con- 
fusion of  ideas  as  to  what  was  right  it  was  not  at  all 
strange  that  the  strong  decided  the  issue  in  their  own 
interest. 


MORAL  ASPECTS  99 

In  more  recent  years  little  thought  has  been  given  to 
the  subject.  By  force  of  custom,  people  have  come  to 
regard  the  present  system  as  about  right  in  theory  and 
they  are  demanding  better  enforcement.  The  confusion 
of  ideas  still  persists,  and  hence,  in  the  face  of  a  con- 
stitutional provision,  there  has  been  little  effort  in  the 
direction  of  serious  readjustments  in  the  law  itself,  and 
the  special  favors  won  by  the  big  mining  interests  of 
early  days  continue  to  be  enjoyed  by  their  successors. 

Doubtless  the  people  of  Nevada  will  in  the  not  distant 
future  consider  anew  some  of  the  more  fundamental 
questions  of  taxation.  The  growing  importance  of 
agriculture  and  of  other  interests,  and  the  increasing 
economic  stability  of  the  State  will  soon  justify  a  recon- 
struction of  our  revenue  system,  and  when  that  time 
comes  it  is  possible  that  a  more  just  method  of  taxing 
mines  will  be  found. 


CHAPTER  V 
THE  GENERAL  PROPERTY  TAX 

In  early  American  history,  when  state  taxes  were  small 
and  when  industry  was  not  greatly  diversified,  the  gen- 
eral property  tax  worked  no  serious  injustice.  Since 
our  industrial  organization  has  become  more  complex, 
since  the  need  for  public  revenues  has  multiplied,  and 
since  the  forms  of  intangible  property  have  become  so 
numerous  and  the  quantity  so  great,  the  general  prop- 
erty tax  no  longer  fits  the  situation.  It  is  defective  from 
the  standpoint  of  every  theory  of  taxation  and  has 
broken  down  in  practise. 

As  a  consequence  of  the  more  or  less  clear  perception 
of  the  failure  of  the  general  property  tax  to  secure 
equitable  results,  all  parts  of  the  United  States  are  going 
through  the  experience  of  trying  to  reform  taxation. 
The  earlier  efforts  usually  take  the  form  of  provision  for 
better  administrative  machinery  on  the  theory  that  the 
system  would  be  all  right  if  it  were  effectively  adminis- 
tered. But  the  more  efficient  the  administration  the  more 
evident  it  is  that  the  system  is  wrong  in  its  fundamental 
features,  and  so  we  find  a  tendency  more  or  less  general 
to  abandon  the  general  property  tax  in  favor  of  a  system 
better  adapted  to  present  conditions.  In  this  movement, 
many  of  the  States,  including  Nevada,  are  hampered  by 
constitutional  requirements  which  permit  of  no  con- 
sistent policy  of  reform.  In  such  States  there  is  a  ten- 
dency to  evade  the  provisions  of  the  constitution  by 


THE  GENERAL  PROPERTY  TAX        1Q1 

means  of  legislation  some  of  which  has  never  been  tested 
in  the  courts.  Some  features  of  the  system  have  been 
nearly  if  not  quite  nullified  by  administrative  practises 
which,  because  of  their  universality  and  long  continua- 
tion, might  be  regarded  as  a  part  of  the  unwritten  con- 
stitution. 

Some  States  had  fewer  constitutional  restrictions, 
while  others  have  in  recent  years  amended  their  con- 
stitutions so  that  they  are  able  to  proceed  in  a  frank 
open  way  and  to  abandon  all  pretense  to  a  general  prop- 
erty tax.  These  States  are  in  process  of  devising  sys- 
tems of  taxation  adapted  to  the  needs  of  the  Twentieth 
Century.  This  movement  is  supported  by  the  experience 
of  the  nations  of  Europe,  and  it  is  in  harmony  with  the 
best  thought  of  students  of  financial  science  in  America. 

In  Nevada  the  general  property  tax  was  made  a  part 
of  the  organic  law,  the  constitution  exempting  mines, 
mining  claims,  and  public  property  only. 

The  Legislature  shall  provide  by  law  for  a 
uniform  and  equal  rate  of  assessment  and  taxa- 
tion, and  shall  prescribe  such  regulations  as 
shall  secure  a  just  valuation  for  taxation  of  all 
property,  real,  personal,  and  possessory,  except- 
ing mines  and  mining  claims,  the  proceeds  of 
which  alone  shall  be  taxed,  and  also  excepting 
such  property  as  may  be  exempted  by  law  for 
municipal,  educational,  literary,  scientific,  relig- 
ious, or  charitable  purposes.  Constitution,  Arti- 
cle X,  as  originally  adopted. 

The  general  property  tax  is  not,  in  practise,  just  what 
it  purports  to  be.  Some  forms  of  property  are  pretty 
generally  taxed,  but  the  assessments  are  far  from  uni- 


102  TAXATION  IN  NEVADA 

form.  Other  forms  of  property  are  able  to  evade  taxa- 
tion in  part  but  not  wholly,  and  still  other  property 
escapes  altogether  or  with  insignificant  exceptions.  In 
the  following  sections  the  general  property  tax  in  its 
relation  to  the  more  important  classes  of  property  is 
discussed. 

TAXATION  OF  REAL  ESTATE 

Under  ordinary  conditions  real  estate  is  quite  gen- 
erally assessed,  the  property  not  being  easily  hidden, 
and  the  ownership  being  a  matter  of  record.  But 
Nevada  does  not  present  ordinary  conditions.  The  great 
size  of  many  of  the  counties  and  the  great  stretches  of 
uninhabited  country  have  made  it  easy  for  the  Assessors 
to  miss  some  land.1  The  problems  here  are  almost  wholly 
administrative,  and  under  the  more  uniform  procedure 
brought  about  through  the  agency  of  the  Tax  Commis- 
sion it  is  pretty  certain  that  nearly  all  taxable  land  is 
assessed. 

There  are  unusual  difficulties  in  the  way  of  ascertain- 
ing land  values  in  Nevada.  Because  of  the  size  of  the 
holdings,  they  do  not  often  change  ownership,  and 
hence  the  actual  market  value  is  not  known.  A  large 
range  may  include  some  first-class  irrigated  land,  other 
land  capable  of  being  irrigated  during  the  spring 
months  only,  some  first-class  mountain  pasture  land, 
some  worthless  alkali  flats,  some  stony  mountain  peaks, 
and  all  grades  and  variations  between  these  extremes. 
The  value  of  the  owned  land  cannot  be  very  accurately 
determined  by  the  quantity  of  live  stock  owned  by  the 

'Data  in  possession  of  the  Tax  Commission  show  that  about  five  per  cent 
of  the  taxable  land  was  unassessed  in  1912.  Other  information  indicates  a 
much  larger  deficiency. 


THE  GENERAL  PROPERTY  TAX         1Q3 

land  owner,  because  the  sheep  and  cattle  live  chiefly  on 
public  land.  Some  pretty  large  sheep  owners  own  no 
land,  but  this  condition  was  more  common  twenty  years 
ago.  If  the  owned  land  did  give  the  owner  an  absolute 
control  of  a  certain  area  of  public  land,  it  could  be 
valued  for  what  such  control  would  be  worth.  But  the 
control  is  incomplete,  uncertain,  and  extra-legal,  being 
maintained  in  part  by  the  use  of  fear  and  intimidation. 
Doubtless  it  has  a  real  value,  but  such  value  depends 
upon  the  policy  of  the  National  Government  relative  to 
the  pasturage  of  public  lands  and  upon  the  keenness  of 
competition  of  rival  stockmen.  Moreover,  the  value  of 
range  land  varies  with  the  price  of  beef  and  mutton, 
and  consequently  it  has  increased  notably  in  the  last 
fifteen  years.  For  these  reasons  the  tendency  to  under- 
assess  ranch  property  has  been  marked  and  the  under- 
assessments appear  to  have  been  greatest  in  those  sections 
where  the  holdings  are  largest. 

Before  the  creation  of  the  State  Tax  Commission  it 
was  the  custom  to  assess  all  the  range  land  owned  by  a 
certain  owner  in  a  given  county  at  a  uniform  price  per 
acre,  although  some  thousands  of  acres  might  be  almost 
valueless  and  other  thousands  of  acres  situated  fifty  or 
one  hundred  miles  distant  might  be  worth  much  more 
than  the  assessed  value.  The  aim  was  to  get  a  reason- 
ably satisfactory  total.  Had  there  been  small  local  units 
of  taxation  such  as  townships,  school  districts,  or  road 
districts  this  would  have  involved  some  serious  difficul- 
ties.1 Appropriate  classifications  have  been  made  by  the 
Tax  Commission  in  recent  years.  ••-  -i 

'Very  few  school  districts,  and  those  chiefly  the  village  and  city  districts. 


104  TAXATION  IN  NEVADA 

In  1911  the  Legislature  enacted  a  law  providing  for 
a  minimum  value  of  $1.25  per  acre  for  all  lands.1  This 
was  intended  to  prevent  the  underassessment  of  railroad 
grant  land  and  of  range  land,  it  being  assumed  that  all 
land  was  worth  at  least  this  amount.  The  act  is  of 
doubtful  constitutionality,  since  there  are  many  whole 
sections  which  are,  beyond  doubt,  worth  less  than  the 
minimum — perhaps  worth  nothing  at  all.2 

The  actual  value  of  city  and  village  real  estate  is  more 
easily  determined  since  it  is  sold  more  frequently,  and 
its  rental  value  is  ascertainable.  Most  of  such  property 
belongs  to  small  owners  who  do  not  bother  the  Assessor 
with  protests.  The  fact  that  values  are  more  uniform 
for  certain  sections  of  the  city  than  for  ranch  property 
contributes  to  uniformity  of  assessments.  Consequently 
city  real  estate  has  been  more  uniformly  assessed  and  the 
rate  is  higher  in  proportion  to  value.  Still  there  have 
been  marked  inequalities  even  in  the  city.3 

TAXATION  OP  LIVE  STOCK 

The  assessment  of  range  live  stock  in  the  earlier  period 
of  this  industry  presented  some  features  of  unusual 
difficulty.  The  stock,  particularly  the  sheep,  pastured 

levy  local  district  taxes.  The  schools  are  supported  by  state  and  county 
taxes.  The  roads  are  maintained  by  county  taxes.  There  are  no  township 
taxes. 

'Statutes  of  Nevada,  1911.  p.  101. 

:The  Supreme  Court  has  held  that  the  law  of  1913  creating  the  Tax  Com- 
mission conferred  on  that  body  the  power  to  establish  a  lower  valuation  for 
land  not  worth  so  much  as  $1.25  per  acre,  but  that  the  law  of  1911  applies 
so  far  as  County  Assessors  are  concerned.  The  constitutional  question  was 
not  decided.  (38  Nev.  112.) 

3In  March  of  a  certain  year  there  were  two  pieces  of  real  estate  sold  in 
Reno,  one  being  a  highly  valuable  business  site  and  the  other  a  modest  resi- 
dence lot.  The  residence  lot  was  assessed  at  the  purchase  price  exactly  and 
the  business  site  at  only  eight  per  cent  of  the  purchase  price. 


LIVE  STOCK  105 

over  great  stretches  of  mountain  and  desert  range  extend- 
ing into  several  counties,  and  frequently  dodged  the 
Assessor  by  crossing  county  or  state  lines.  The  cattle 
of  several  owners  commonly  shared  in  the  use  of  the  pas- 
turage of  a  district.  Ordinarily  neither  cattle  nor  sheep 
were  fed  in  winter.  The  owners  did  not  know  very 
accurately  the  number  of  animals  owned.  Sheep  shear- 
ing gave  an  opportunity  for  a  count,  but  this  occurred 
in  many  cases  after  assessment  time.  The  loss  of  cattle 
and  sheep  on  the  range  during  the  winter  and  spring 
was  considerable  and  sometimes  very  great.  Because  of 
the  uncertainty  as  to  numbers  and,  further,  on  account 
of  the  fact  that  a  late  winter  storm  might  be  fatal  to 
many  animals  already  weakened  by  the  rigors  of  winter 
and  the  lack  of  sufficient  feed,  it  became  customary  to 
assess  only  a  part  of  the  sheep  and  cattle.  The  stockmen 
did  not  feel  that  they  should  pay  tax  on  dead  animals, 
and  so  they  made  large  allowance  for  bad  weather  with 
its  possible  results.  The  Assessors  could  not  make  a  per- 
sonal count,  and  they  were  very  conservative  in  using 
their  opinions  as  against  the  claims  of  the  stockmen.  As 
a  consequence,  the  custom  of  assessing  only  a  part  of  the 
live  stock  was  established. 

In  more  recent  years  the  conditions  have  changed. 
Cattle  are  commonly  fed  in  winter.  Counting  is  possible 
at  feeding  time  and  at  branding  time,  and  sheep  could 
be  counted,  not  only  at  shearing  time,  but  in  connection 
with  dipping  for  disease  prevention  and  in  connection 
with  the  use  of  the  forest  reserve.  Moreover,  better  care 
and  feeding  have  greatly  reduced  the  risk  due  to  bad 
weather  conditions  and  infectious  diseases.  But  in  spite 


106  TAXATION  IN  NEVADA 

of  the  improved  conditions  the  custom  of  reporting  only 
a  part  of  the  live  stock  continued,  and  it  is  not  improbable 
that  the  situation  became  even  worse,  due  to  the  tendency 
of  Assessors  to  repeat  the  assessment  of  the  previous 
years  when  the  industry  was  growing.  The  rapid  increase 
in  the  number  of  animals  assessed  in  the  years  immedi- 
ately following  the  creation  of  the  State  Tax  Commission 
(1913)  may  be  due  in  some  small  measure  to  a  real 
increase,  especially  in  the  case  of  sheep,  but  it  is  chiefly 
the  result  of  the  more  vigorous  effort  to  get  a  correct 
count. 

NUMBER  OF  SHEEP  AND  CATTLE  ASSESSED  IN  RECENT  YEARS 

Year  Sheep-  Cattle* 

19121 500,000  160,000 

1913 687,751  192,000 

1914 1,221,448s  232,000 

1915 794,840  276,428 

1916 883,219  285,145 

In  the  case  of  ordinary  farm  live  stock  the  assessments 
have  been  more  accurate  since  it  has  been  easy  to  secure 
accurate  counts. 

The  determination  of  the  situs  of  range  live  stock  for 
purposes  of  taxation  involves  some  special  considerations 
because  of  the  wide  area  over  which  sheep  and  cattle  may 
travel.  The  Supreme  Court  has  held  that  the  situs  of 
cattle  is  not  controlled  by  the  mere  residence  of  the 
owner,  but  if  the  cattle  are  cared  for  and  managed  from 
a  home  ranch  their  situs  for  taxation  is  fixed  by  the  loca- 
tion of  such  ranch,  even  if  they  do  at  times  pasture  in 

'Approximate. 
-"Lambs  excluded. 

'The  number  assessed  after  allowing  for  range  losses  assumed  to  be  25%. 
The  actual  number  of  sheep  was  over  1,600,000. 
'Calves  excluded. 


LIVE  STOCK  ]()7 

some  other  county.  On  the  other  hand,  if  the  cattle  are 
bred,  born,  branded,  and  raised  in  a  certain  county,  that 
county  is  their  situs,  even  if  the  owners  live  in  another 
county.1 

By  later  legislative  enactment  the  situs  of  range  live 
stock  has  been  further  defined  in  such  a  way  that  range 
live  stock  owned  by  nonresidents  is  taxable  in  the  county 
where  first  found  and  assessed,  and  the  taxes  are  assess- 
able and  collectible  at  any  time.  The  previous  payment 
in  another  State  constitutes  no  bar  to  their  collection  in 
this  State.2  Stock  owned  by  residents  and  driven  or 
removed  from  one  county  to  another  for  grazing  is  tax- 
able in  the  county  where  first  found  and  assessed,  except 
that  if  the  owner  has  a  home  ranch  in  another  county 
where  the  stock  is  grazed  for  a  part  of  the  year,  the  situs 
is  the  home  ranch.3 

SPECIAL  LIVESTOCK  INSPECTION  TAXES 
A  special  ad  valorem  tax  on  sheep  is  levied  under  an 
act  of  1907,  amended  in  1909.4  The  tax  is  levied  by  the 
County  Commissioners  on  request  of  the  State  Board  of 
Sheep  Inspection,  the  request  being  in  effect  a  mandatory 
order.  The  rate  is  determined  by  the  Board  of  Sheep 
Inspection,  provided  that  it  shall  not  exceed  twelve  mills 
on  the  dollar  of  assessed  valuation  of  all  sheep.  The  reve- 
nue derived  from  this  tax  constitutes  a  special  fund  in 
the  hands  of  the  State  Treasurer  out  of  which  the 
expenses  incurred  under  authority  of  the  State  Board  of 
Sheep  Inspection  are  paid. 

'17  Nev.  383  ;  20  Nev.  446  ;  21  Nev.  223. 
Statutes  of  Nevada,  1895,  p.  56. 
"Statutes  of  Nevada,  1903,  p.  65. 
'Statutes  of  Nevada,  1907,  p.  235  ;  1909,  p.  74. 


108  TAXATION  IN  NEVADA 

A  similar  special  tax  on  cattle,  horses,  and  hogs  is 
levied  on  request  of  the  State  Board  of  Stock  Commis- 
sioners.1 The  rate  must  not  exceed  six  mills  on  a  dollar 
and  the  revenue  constitutes  a  special  fund  to  pay 
expenses  incurred  under  the  authority  of  the  board  for 
the  purpose  of  controlling  infectious  diseases  and  other- 
wise conserving  the  interests  of  the  livestock  industry. 
There  is  ground  for  doubt  as  to  the  constitutionality  of 
both  of  these  acts  in  so  far  as  they  provide  for  special 
ad  valorem  taxes,  since  the  Supreme  Court  has  held  that 
all  ad  valorem  taxes  must  be  of  uniform  rate.2  These 
special  taxes  make  the  rate  higher  on  live  stock  than  on 
other  property.  If  the  revenue  were  collected  in  the  form 
of  a  license  tax  there  would  be  no  doubt  as  to  its  constitu- 
tionality. 

THE  TAXATION  OF  CERTAIN  FORMS  OF  INTANGIBLE 
PROPERTY 

The  uniform  taxation  of  notes,  bonds,  bank  deposits, 
accounts  receivable,  and  corporation  stocks  under  the 
provisions  of  the  general  property  tax  is  impossible 
because,  under  our  administrative  system,  the  ownership 
of  such  property  is  easily  concealed,  and  if  concealment 
should  be  made  difficult  the  situs  is  easily  changed.  A 
tax  that  can  be  evaded  so  easily  is  just  a  voluntary  con- 
tribution, and  is  not  made  except  by  a  few  ignorant  or 
very  conscientious  individuals.  Such  a  tax  is  contrary 
to  public  policy  in  that  it  is  essentially  a  tax  on  honesty. 
The  failure  to  assess  such  property  is  a  defect  that  could 
be  cured  in  part  by  appropriate  legislation,  but  the 

'Statutes  of  Nevada,  1915.  p.  396.  :3  Nev.  177  ;  4  Nev.  200. 


INTANGIBLE  PBQPERTY  109 

trouble  is  inherent  in  the  system  and  the  most  effective 
legislation  could  not  be  more  than  half  successful,  and 
this  would  make  matters  worse  by  reason  of  the  inequal- 
ity. Moreover,  such  taxes  are,  from  the  economic  point 
of  view,  double  taxes  and  hence  contrary  to  public  policy. 
It  is  evident  from  the  debates  of  the  constitutional 
convention  that  the  members  of  that  body  intended  to 
make  such  property  taxable,  and  the  first  State  Legis- 
lature, which  met  a  few  months  later  and  which  had  in 
its  membership  several  members  of  the  constitutional 
convention,  proceeded  to  enact  a  law  providing  for  the 
assessment  and  taxation  of  personal  property  which  was 
defined  to  include  "all  chattels  of  every  description,  all 
money  on  hand,  or  on  deposit  in  bank  or  banks,  or  with 
individuals,  all  money  at  interest  secured  by  mortgage  or 
otherwise,  *  *  *  solvent  debts  other  than  those  men- 
tioned in  this  section  when  the  amount  exceeds  the  same 
character  of  indebtedness  of  the  party  assessed ;  *  *  * 
the  capital  stock  of  all  corporations  (except  the  capital 
stock  of  corporations  organized  for  mining  purposes), 
companies  or  associations  or  individuals  doing  business 
or  having  an  office  within  the  State ;  the  money,  prop- 
erty, and  effects  of  every  kind,  except  real  estate,  of  all 
banks,  banking  institutions,  or  firms,  bankers,  money 
lenders,  and  brokers,  and  all  property  of  whatever  kind 
or  nature  not  included  in  the  term  real  estate  as  said 
term  is  defined  in  this  act."1  Elsewhere  an  exemption 
was  provided  for  the  owner  of  stock  in  any  firm',  corpora- 
tion, or  association,  "the  entire  capital  of  which  is 
invested  in  property  which  is  assessed  and  taxed."2 

'Statutes  of  Nevada,  1864-5,  p.  274.     Statutes  of  Nevada,  1864-5,  p.  276. 


TAXATION  IN  NEVADA 

Even  in  this  first  law  we  see  the  Legislature  unwilling 
to  go  the  full  length  of  the  theory  it  worked  under, 
granting  exemption  for  two  sorts  of  property  under  cer- 
tain conditions. 

TAXATION  OF  MORTGAGE-SECURED  LOANS 

The  first  revenue  act  in  Nevada  provided  for  the  tax- 
ation of  mortgage-secured  loans1  and  for  several  years 
mortgages  were  taxed,  but  the  amount  of  this  sort  of 
property  assessed  became  less  as  the  years  passed,  and 
eventually  mortgages  were  almost  wholly  exempt  in  prac- 
tise while  the  law  still  provided  for  their  taxation. 

Since  loans  secured  by  mortgage  are  matters  of  public 
record,  it  is  easy  to  tax  such  securities,  but  when  laws 
adequate  to  this  purpose  are  enacted  the  effect  is  to  place 
a  double  tax  upon  the  borrower,  who  pays  one  tax  on 
the  property  mortgaged  and  another  in  the  form  of 
higher  interest. 

As  a  matter  of  fact,  most"  laws  purporting  to  tax 
mortgages  are  easily  evaded — sometimes  by  all  lenders, 
sometimes  only  by  nonresident  lenders.  Where  the  law 
is  of  such  a  character  as  to  discriminate  against  resident 
lenders  it  tends  to  raise  the  rate  of  interest  to  the  bor- 
rower without  resulting  in  a  corresponding  revenue  to 
the  State.  The  same  result  comes  from  laws  which  can 
be  evaded  through  fraud.  The  lender  evades  the  tax 
by  fraud,  but  this  involves  a  certain  risk  and  the  bor- 
rower pays  for  the  risk.  Likewise,  when  mortgages  are 
exempt  to  certain  owners  such  as  banks,  but  not  to  all 
owners,  the  tendency  is  to  concentrate  the  business  in 

'Statutes  of  Nevada,  1864-6,  p.  174. 


MORTGAGE-SECURED  LOANS  m 

the  hands  of  the  favored  institutions  and  to  raise  the  rate 
of  interest.  It  is  a  matter  of  knowledge  that  some  lenders 
have  left  the  State  in  order  to  escape  taxes  on  their 
mortgage-secured  notes.  In  other  cases  the  notes  have 
been  made  out  in  the  name  of  a  nonresident  relative  of 
the  lender.  In  other  cases  a  deed  with  a  secret  contract 
has  served  the  purpose  of  evasion. 

In  1877  mortgages  were,  by  act  of  the  Legislature, 
exempted  from  all  taxation,1  but  the  act  was  declared 
unconstitutional  by  the  Supreme  Court  in  1882.2  In 
1907  the  Legislature  passed  a  resolution  for  a  constitu- 
tional amendment  having  for  its  purpose  the  reduction 
of  the  assessment  of  mortgaged  property  by  the  amount 
of  the  debt  so  secured,  but  the  resolution  failed  of  pas- 
sage at  the  hands  of  the  next  Legislature.3  In  1911, 
however,  an  act  of  similar  intent  was  passed  by  the 
Legislature4  without  waiting  for  constitutional  authoriza- 
tion. By  common  consent  this  law  was  ignored,  and  in 
1912  it  was  repealed.  Again,  in  1913,  mortgages  were  by 
law  practically  exempted  from  taxation  on  the  theory 
that  they  represent  an  interest  in  the  property  mort- 
gaged.5 The  law  declares  that  the  assessment  of  mort- 
gaged real  estate  shall  be  deemed  as  the  assessment  of 
the  mortgage,  but  the  exemption  does  not  apply  in  the 
case  of  the  mortgaged  real  estate  of  public-service  cor- 
porations. 

This  is,  in  effect,  an  exemption  of  mortgage-secured 

'Statutes  of  Nevada,  1877,  p.  186. 
217  Nev.  146. 

3Statutes  of  Nevada,  1907,  p.  452. 
'Statutes  of  Nevada,  1911,  p.  352. 

^Statutes  of  Nevada,  1913,  p.  578.  A  similar  law  in  California  was 
enacted  after  special  constitutional  authorization  was  secured. 


112  TAXATION  IN  NEVADA 

notes.  Whether  the  Supreme  Court  would  sustain  the 
exemption  under  the  theory  of  this  act  may  never  be 
known,  for  the  exemption  appears  to  meet  with  such 
universal  approval  that  there  is  no  certainty  that  a  test 
case  will  arise.  Doubtless  this  complete  acquiescence  in 
the  law  arises  in  part  from  the  knowledge  that  mort- 
gages had  been  for  many  years  practically  exempt 
through  the  defects  of  administrative  procedure.  The 
law  is  a  mere  theoretical  recognition  of  an  accomplished 
fact.  If,  however,  the  exemption  of  such  mortgages 
involved  a  higher  rate  of  taxation  on  other  property,  the 
owners  of  such  property,  particularly  public-service  cor- 
porations, would  have  a  strong  case  against  the  constitu- 
tionality of  the  law  in  that  it  does  in  fact  exempt  a 
species  of  property  which,  according  to  a  decision  of  the 
Supreme  Court,  must  be  taxed  under  the  constitution 
and  in  that  it  makes  a  discrimination  against  mortgages 
on  the  property  of  public-utility  corporations.  No  case 
touching  the  exemption  of  "debts"  (accounts  receivable) 
to  the  extent  that  they  are  balanced  by  accounts  payable 
has  ever  come  before  the  Supreme  Court,  and  the  same 
is  true  as  to  the  acts  of  1864  and  1865  in  which  the  shares 
of  stock  of  a  corporation  were  exempted  in  ease  its  entire 
capital  was  invested  in  taxed  property. 

These  three  legal  exemptions  of  doubtful  but  untested 
constitutionality  suggest  a  method  of  evolution  under 
a  rigid  misfit  constitution.  If  we  wait  until  there  is  a 
unanimous  desire  for  an  unconstitutional  measure,  we 
may  proceed  safely  on  the  assumption  that  there  will 
never  be  a  test  case. 

There  are  other  forms  of  property  equally  entitled 


BANKS  H3 

to  exemption  from  taxation.  It  is  not  easy  to  see  why 
an  unsecured  note  should  be  taxable  while  a  mortgage- 
secured  note  is  exempt,  and  the  case  is  fully  as  strong  for 
accounts  receivable  even  when  not  balanced  by  accounts 
payable.  There  is  no  good  reason  for  taxing  bank 
deposits,  and  there  are  some  good  reasons  for  exempting 
them.  If  the  State  were  to  create  an  administrative  sys- 
tem capable  of  placing  such  property  on  the  assessment 
roll,  it  would  be  disastrous,  not  only  to  the  banks,  but  to 
the  business  community  generally.  With  taxes  approxi- 
mately equal  to  the  rate  of  interest  in  savings  banks,  it  is 
probable  that  many  depositors  would  transfer  their 
deposits  to  the  banks  of  some  other  State  where  they 
could  not  be  reached  by  the  Assessor.  Doubtless  the 
cause  of  the  acquiescence  of  the  people  in  the  legal  dis- 
crimination against  these  forms  of  property  is  found  in 
the  fact  that  evasion  has  been  so  easy  that  there  has  been 
no  felt  need  for  legal  exemption. 

TAXATION  OP  BANKS 

Ordinarily  the  assets  of  a  bank  are,  for  the  most  part, 
balanced  by  its  deposit  liabilities — its  debts.  As  a  eon- 
sequence  it  makes  a  very  great  difference  whether  a 
bank  is  taxed  on  its  entire  assets  or  whether  the  tax  is 
levied  on  the  value  of  the  shares  alone  as  permitted  by 
the  federal  law  relating  to  national  banks.  Consider  the 
case  of  a  bank  with  stock  worth  $200,000  and  with  assets 
worth  $1,000,000,  where  the  tax  rate  is  $3  on  the  hun- 
dred, a  rate  not  uncommon  in  Nevada.  If  taxes  are  paid 
on  the  value  of  the  shares  only,  they  will  amount  to 
$6,000 ;  if  paid  on  total  assets,  the  tax  will  be  $30,000. 


114  TAXATION  IN  NEVADA 

Now  the  first  revenue  law  in  Nevada  provided  for  a 
tax  on  the  entire  assets  of  all  banks,  including  real  estate, 
money,  furniture,  securities  and  "effects  of  every  kind" 
and  "all  property  of  whatever  kind  or  nature,"1  and  this 
law  remained  on  the  statute  books  without  modification 
until  1907  when  provision  was  made  for  taxing  real 
estate  to  the  bank  and  the  shares  of  stock  to  the  owners 
with  other  assets  exempt  as  they  had  been  for  national 
banks  in  the  beginning.2  It  is  hard  to  see  how  the  state 
banks  could  have  continued  to  do  business  under  this 
gross  discrimination  had  the  law  been  strictly  enforced.2 
At  a  matter  of  fact  they  were  assessed  in  about  the 
same  way  as  were  the  national  banks.  The  chief  provi- 
sions of  the  law  of  1907  were  followed  in  practise  long 
before  the  law  was  enacted. 

All  in  all,  the  State  secures  but  an  insignificant  revenue 
from  the  taxation  of  money,  bonds,  mortgages,  notes, 
accounts,  and  shares  of  corporate  stock,  aside  from  bank 
stock.  In  most  cases  the  collection  of  such  tax,  if  made 
effective,  would  be  double  taxation  in  an  economic  sense 
and  would  be  unjust  to  the  business  interest  concerned. 
Because  of  their  common  evasion  they  are  the  more 
unjust  in  the  few  cases  where  they  are  imposed.  The 
law  requiring  the  taxation  of  such  property  has  little 
effect  except  to  teach  deception,  evasion,  and  fraud,  and 

'The  act  of  1865  was  intended  to  apply  to  all  banks,  but  this  was  pre- 
cluded by  the  provisions  of  an  act  of  Congress.  By  this  act  (June  3,  1864) 
the  shares  of  stock  in  any  national  bank  could  be  made  taxable  to  the  owner 
and  the  real  estate  to  the  bank,  provided  the  burden  of  taxation  on  such 
banks  should  not  be  greater  than  on  state  banks  or  other  moneyed  capital. 

!In  1882  the  Supreme  Court  held  that  a  state  bank  was  under  obligation 
to  pay  taxes  on  its  money  and  on  its  mortgage-secured  loans,  but  this  was 
on  an  appeal  based  on  an  act  of  the  Legislature  exempting  mortgages  gen- 
erally. The  question  of  want  of  uniformity  was  not  considered  by  counsel 
or  by  the  court.  (17  Nev.  146.) 


PUBLIC  UTILITIES  H5 

to  the  extent  that  there  is  any  other  effect,  it  is  to  handi- 
cap the  honest  man  and  the  business  of  the  community. 
In  view  of  these  facts,  which  have  been  demonstrated  by 
the  experience  of  every  American  State,  it  would  appear 
to  be  the  part  of  wisdom  to  amend  the  constitution  in 
such  a  way  as  to  permit  such  changes  in  our  tax  laws 
as  may  be  dictated  by  considerations  of  justice  and 
efficiency.  While  some  progress  might  be  made  through 
a  strained  construction  of  the  constitution  or  through 
general  assent  without  a  judicial  test,  it  is  better  to  rely 
upon  an  outright  change  in  the  fundamental  law  so  that 
the  Legislature  can  deal  with  the  whole  problem  of  prop- 
erty classifications  consistently. 

TAXATION  OP  PUBLIC  UTILITIES 

Under  the  Nevada  constitution  the  taxation  of  all 
public  utilities  is  effected  under  the  provisions  of  the 
general  property  tax.  Originally  the  assessment  of  such 
property  was  left  to  the  various  County  Assessors,  each 
acting  according  to  his  own  judgment.  Apparently 
there  was,  at  first,  no  recognition  of  the  fact  that  public 
utilities  present  special  problems  in  taxation,  and,  even 
now,  there  is  no  general  appreciation  of  the  importance 
of  appropriate  classification.1 

THE  CENTRAL  PACIFIC  RAILROAD 

By  far  the  most  important  public-utility  property  of 
Nevada  is  the  Central  Pacific  Railroad.  The  construc- 
tion of  this  road  was  begun  during  the  Civil  War  and 

'"The  property  of  railroad  and  canal  companies  constitutes,  a  legitimate 
class  of  property  for  the  purpose  of  taxation — a  class  which,  in  order  to 
treat  it  fairly  in  the  matter  of  taxation,  must  be  treated  separately."  (48 
N.  J.  L.  146,  278.)  Cooley  on  Taxation,  3d  ed.  vol.  1,  p.  693. 


TAXATION  IN  NEVADA 

was  completed  in  1869.  At  this  time  most  of  the  region 
along  the  line  was  practically  uninhabited  and  the  popu- 
lation of  the  Pacific  Coast  was  so  small  that  there  was 
110  probability  that  the  earnings  of  the  road  would  be 
sufficient  to  justify  its  construction  for  a  considerable 
number  of  years. 

This  railroad  was  built  largely  for  national  political 
reasons.1  The  Civil  War  furnished  an  object  lesson  as  to 
the  danger  arising  from  clashing  economic  systems.  It 
was  believed  that  a  railroad  system  connecting  the  East 
with  the  West  would,  through  its  industrial  and  com- 
mercial effects,  bind  the  two  sections  closer  together 
politically.  The  aim  was  national  political  unity  based 
on  national  economic  unity. 

Further  national  advantages  in  the  way  of  economy  and 
efficiency  in  the  carrying  of  mail,  in  the  transportation 
of  troops,  munitions,  and  other  war  supplies,  and  of 
stores  for  the  use  of  the  Government  were  anticipated. 

The  National  Government,  therefore,  was  justified  in 
giving  such  aid  as  might  be  necessary  to  secure  the  con- 
struction of  the  road.  This  aid  was  granted  by  an  act  of 
Congress  of  July  1,  1862,  amended  by  a  further  act  of 
July  2,  1864.  The  aid  consisted  in  part  of  a  subsidy 
loan  and  in  part  of  a  land  grant.  According  to  the  pro- 
visions of  this  grant  the  railroad  corporation  was  to 
receive  the  odd-numbered  sections  of  land  for  twenty 
miles  on  each  side  of  the  line.  This  land  was,  excepting 
mineral  land  and  lands  otherwise  disposed  of,  to  be 
patented  to  the  railroad  as  rapidly  as  the  road  should 
be  constructed  in  sections  of  twenty  miles  each,  provided 

'See  opinion  of  U.  S.  Supreme  Court,  91  U.  S.  79-80. 


PUBLIC  UTILITIES  H7 

that  no  transfer  of  title  should  be  made  until  the  rail- 
road company  should  pay  into  the  United  States  treasury 
the  costs  of  surveying  the  land. 

The  expectation  that  the  railroad  company  would 
receive  substantial  aid  toward  the  construction  of  the 
road  through  the  sale  of  such  lands  may  have  been 
realized  in  connection  with  certain  parts  of  the  line,  but 
most  of  the  Nevada  lands  were  for  a  long  time  unsalable. 
In  fact  they  are  still  unsold.  Had  the  company  taken 
patents  for  this  land  it  would  have  been  subject  to  tax- 
ation, and,  in  the  absence  of  any  rentals  or  other 
revenue  accruing  from  its  ownership,  it  would  have 
been  a  liability,  instead  of  an  asset,  for  a  number  of  years 
at  least.  Through  the  provision  of  the  law  relative  to 
the  costs  of  surveying,  the  company  was  able  to  postpone 
the  patenting  of  unsalable  land  and  thus  to  avoid  liability 
for  state  and  local  taxes.1 

But  in  the  year  1886  Congress  enacted  a  law  author- 
izing the  taxation  of  such  lands,  so  far  as  they  were 
surveyed,  but  with  a  provision  giving  the  National  Gov- 
ernment a  prior  lien  to  the  amount  of  the  costs  of  the 
survey.2  During  the  next  three  or  four  years  the  power 
of  the  State  in  respect  to  the  taxation  of  such  lands  was 
clearly  defined  by  three  Supreme  Court  decisions.3  The 
survey  of  the  land-grant  strip  proceeded  slowly,  but  is 
now  complete.  The  value  of  such  surveyed  lands  as 
assessed  for  taxation  in  1898  was  $358,192.  By  1902 
the  value  was  $567,075.  In  1903  the  rate  per  acre  as 

'It  had  been  decided  by  the  U.  S.  Supreme  Court  that  such  lands  were  not 
subject  to  state  and  local  taxation  since  the  title  rested  with  the  Government. 
(16  Wall.  603;  22  Wall.  444;  115  U.  S.  600.) 

=Act  of  Congress,  July  10,  1886. 

"•21  Nev.  247. 


118  TAXATION  IN  NEVADA 

well  as  the  acreage  was  increased  and  the  total  value 
was  $1,347,679.  By  1916  the  figures  had  increased  to 
$7,569,395. 

The  Legislature  of  1911  enacted  a  law  fixing  a  mini- 
mum valuation  of  $1.25  per  acre  on  land.  This  applies 
to  all  land,  but  it  has  special  application  to  the  unsold 
railroad  lands.  In  general,  the  lands  which  are  in 
private  ownership  are  the  better  lands — lands  capable 
of  irrigation,  lands  valuable  for  pasturage,  for  timber, 
or  for  other  purposes.  The  railroad  land,  however,  con- 
sisting of  the  odd-numbered  sections,  was  not  selected 
for  its  value,  and  consequently  a  considerable  part  of 
such  land  is  of  very  inferior  character.  It  is  probable 
that  the  practical  effect  of  this  law  is  to  raise  the  valua- 
tion of  such  land  disproportionately — in  some  cases  to 
a  point  beyond  its  actual  cash  value. 

Aside  from  the  taxation  of  these  lands  the  chief  ques- 
tions relative  to  railroad  taxation  arose  in  connection 
with  the  assessment  and  taxation  of  the  Central  Pacific 
Railroad  in  the  years  immediately  following  its  con- 
struction. It  must  be  remembered  that  at  this  time 
(1869)  the  whole  question  of  the  relation  of  the  rail- 
roads to  the  public  was  characterized  by  great  confusion 
of  thought  in  all  parts  of  the  United  States,  and  this 
confusion  extended  to  the  offices  of  railway  managers 
and  attorneys  as  well  as  to  the  halls  of  legislation  and 
to  the  courts.  The  experience  of  Nevada,  in  this  respect, 
while  less  tortuous  that  that  of  many  other  States, 
includes  the  development  of  some  special  agencies  and 
some  special  sorts  of  procedure  for  the  assessment  and 
taxation  of  railroad  and  other  public-utility  property. 


PUBLIC  UTILITIES  119 

It  also  includes  a  considerable  amount  of  litigation,1 
through  which  the  meaning  of  the  state  laws  has  been 
made  definite.  In  March,  1869,  the  legislature  enacted 
the  first  special  law  relating  to  the  assessment  of  rail- 
roads.2 In  the  main  it  was  an  application  of  the  general 
property  tax  law  to  the  assessment  of  railroads,  and  it 
included  provisions  as  to  statement  of  property  and 
value  from  some  officer  of  the  corporation  to  the  County 
Assessor.  This  statement  was  to  include:  (1)  The 
length  of  the  road  in  the  county  and  the  value  thereof; 
(2)  a  list  of  property,  real  and  personal;  (3)  the  whole 
length  of  the  railroad  in  the  State;  (4)  the  number  and 
value  of  all  locomotives  and  cars  used  within  the  State, 
and  an  apportionment  of  the  value  of  the  same  to  the 
county  prorated  to  the  mileage. 

From  the  language  of  this  act  the  meaning  is  not 
wholly  clear.  In  1870  the  Assessor  of  Washoe  County, 
in  the  absence  of  a  statement  from  the  railroad  com- 
pany in  the  form  required  by  law,  proceeded  to  assess 
the  railroad  at  fifteen  thousand  dollars  per  linear  mile.3 
In  reaching  this  valuation  he  took  into  consideration 
data  bearing  on  the  cost  of  construction  and  also  data 
relative  to  its  earnings  and  profitableness.  The  County 
Board  of  Equalization  later  reduced  the  valuation  by 
about  one-half  and  the  company  paid  the  tax  on  the 

'The  first  impression  one  receives  from  an  examination  of  taxation  litiga- 
tion is  that  the  Central  Pacific  Railroad  Company  has  been  a  party  to  a 
disproportionately  large  number  of  cases.  Further  consideration  shows  that 
it  has  had  fewer  cases  in  proportion  to  the  amount  of  taxes  paid  than  some 
other  important  interests. 

Statutes  of  Nevada,  1869,  p.  184. 

:1In  a  statement  submitted  by  an  officer  of  the  railroad  company,  but 
imperfect  in  form  and  incomplete  in  matter,  a  valuation  of  $6,000  was  given 
as  the  per  mile  value. 


120  TAXATION  IN  NEVADA 

amount  as  equalized.  As  a  result  of  the  litigation  in 
connection  with  this  situation,  the  Supreme  Court  ren- 
dered decisions  and  opinions  which  laid  the  foundation 
for  all  later  railroad  taxation  in  Nevada. 

It  was  decided  that  the  action  of  the  County  Board 
of  Equalization  in  reducing  the  assessment  was  void, 
due  to  lack  of  jurisdiction.1  The  denial  of  the  right  of 
equalization  was  the  penalty  provided  by  law  for  a  fail- 
ure to  make  the  required  statement.  The  railroad  then 
contested  the  payment  on  nine  counts,  one  of  which 
involved  important  unsettled  principles  of  valuation. 

The  railroad  company  contended  that  the  Assessor 
had  valued  the  road  according  to  a  wrong  principle  in 
that  he  had  taken  into  account  the  cost  of  cuts,  fills, 
tunnels,  etc.,  which  constitute  the  road-bed;  also  in 
that  he  had  taken  into  consideration  the  income  and 
profits  arising  from  the  operation  of  the  road,  as  well  as 
the  fact  that  other  portions  of  the  road  extend  easterly 
and  westerly  outside  of  the  county  and  connect  with 
other  roads.  According  to  this  contention  the  legal 
method  of  valuing  a  railroad  was  to  ascertain  the  value 
of  the  land  as  land — to  appraise  it  in  the  same  manner 
as  adjacent  lands  of  individuals — and  to  add  to  this 
the  value  of  the  superstructure — the  ties,  rails,  bridges, 
etc. — without  reference  to  the  profitableness  of  the  road 
and  without  reference  to  other  parts  of  the  railroad.2 

As  the  court  pointed  out  in  its  opinion,  this  contention 
demanded  that  nothing  be  taken  into  consideration 
except  the  unimproved  land  and  the  movable  material 
entering  into  the  construction  of  the  track,  and  that  to 

'7Nev.  83.  =10  Nev.  51. 


PUBLIC  UTILITIES  121 

be  considered  as  old  lumber  and  iron  merely.  If  a  part 
of  a  railroad  which  lies  within  a  certain  county  is  con- 
sidered without  reference  to  its  connections,  the  cuts  and 
fills  are  worthless  and  the  ties  and  iron  rails  are  merely 
junk. 

The  decision  of  the  court,  which  was  given  in  1875, 
completely  justified  the  Assessor  in  considering  all  items 
of  cost  of  construction  as  well  as  the  earnings  and  profit- 
ableness of  the  road,  and  the  fact  that  there  were  other 
parts  of  the  road  outside  of  the  county  with  connections 
east  and  west.1  The  opinion  of  the  court  relative  to  this 
question,  which  is  characterized  by  great  lucidity,  may 
be  summarized  as  follows: 

1.  No  principle  of  valuation  of  property  for 
purposes  of  taxation  is  prescribed  by  the  laws 
of  this  State.2    The  statutes  define  the  different 
species   of  property,   and   provide   that  every 
species   shall   be   assessed   at   its   "actual   cash 
value."    The    owners    and    Assessors    must    be 
guided  by  those  general  principles  which  every- 
where   determine    the    valuation    of   property, 
independently  of  statutory  rules. 

2.  Since,  ordinarily,  a  railroad  will  not  be 
built  unless  there  is  a  reasonable  probability 
that  it  will  pay  a  fair  rate  of  interest  on  the 
investment,  the  cost  of  construction  is  prima 
facie  the  value  of  the  road. 

3.  If,  however,  the  cost  was  excessive,  due 
to    bad    management    or    other    conditions    no 
longer  existing,  then  the  present  necessary  cost 

'10  Nev.  63-77. 

:Later  (1891)  the  Legislature  did  by  law  define  "full  cash  value"  as  the 
amount  at  which  the  property  would  be  appraised  if  taken  in  payment  of  a 
just  debt  from  a  solvent  debtor. 


122  TAXATION  IN  NEVADA 

and  not  the  actual  cost  becomes  the  standard 
for  determining  value. 

4.  If,  however,  the  railroad  earnings  are  not 
sufficient  to  pay  current  rates  of  interest  on  the 
cost  of  construction,  and  they  are  not  likely  to 
be  sufficient  so  to  do,  the  road  is  not  worth  what 
it  cost.    When  its  utility  is  less  than  its  cost,  its 
value  is  determined  by  its  utility. 

5.  When  a  railroad  does  not  pay  operating 
expenses  and  is  not  likely  to  do  so,  the  road  is 
worth  only  what  the  movable  materials  used  in 
its  construction  will  sell  for,  less  the  cost  of 
removing  and  marketing  them. 

The  principles  above  set  forth  have,  with  small  excep- 
tions, served  as  a  basis  for  the  taxation,  not  only  of  rail- 
roads, but  of  other  public  utilities  until  recent  years. 
Later  decisions  have  applied  the  principles  to  specific 
cases.  Some  local  roads  serving  mining  camps  have 
suffered  such  loss  of  business  due  to  the  decay  of  the 
camps  that  it  has  been  necessary  to  assess  them  at  value 
far  below  the  cost  of  construction,  mainly  on  the  basis  of 
their  utility  as  determined  by  a  capitalization  of  net 
earnings.1  In  a  few  cases  smaller  roads  have  been  in  a 
position  fairly  to  claim  the  application  of  the  "junk" 
theory  of  valuation. 

In  the  course  of  its  reasoning  the  court  included  the 
following : 

It  (the  railroad)  might,  indeed,  if  the  road 
were  extremely  profitable,  sell  for  much  more 
than  its  necessary  cost;  but  in  that  case  any 
amount  bid  in  excess  of  cost  would  be  allowed, 
not  for  the  road  itself,  but  for  its  franchise,  or 


'23  Nev.  283,  and  28  Nev.  186. 


PUBLIC  UTILITIES  123 

monopoly,  or  something  of  the  sort,  with  a  value 
distinct  from  the  road.  It  would,  therefore,  be 
acting  on  erroneous  principles  of  valuation  to 
add  anything  to  the  necessary  cost  of  the  road 
on  account  of  its  business  or  profits  or  fran- 
chises; and  if,  in  this  case,  the  Assessor  had 
done  so,  the  appellant  would  have  had  just 
ground  of  complaint. 

It  is  probable  that  this  dictum  has  not  been  of  much 
practical  importance  in  the  case  of  railroads,  since  ordi- 
narily it  has  been  possible  to  secure  from  railroads  a 
just  proportion  of  the  public  revenues  without  assessing 
them  at  a  value  beyond  the  cost  of  construction,  but  it 
has  served  as  a  basis  through  which  the  express  com- 
panies and  some  other  public-utility  corporations  have 
escaped  the  payment  of  taxes  on  intangible  property.1 
An  opposite  view  was  taken  by  the  court  in  a  recent  case 
involving  the  assessment  of  the  Wells  Fargo  Express 
Company.2 

The  law  relative  to  the  assessment  of  railroads  has 
been  modified  from  time  to  time  in  ways  which  involve  no 
important  principles  of  valuation  or  of  taxation,  the  pur- 
pose being  to  secure  more  accurate  assessments  through 
procedure  adapted  to  this  special  sort  of  property.  In 
1873  the  clause  authorizing  the  Assessor  to  take  evidence 
or  sworn  testimony  other  than  that  furnished  by  the  rail- 
road company  was  omitted,  but  it  is  not  clear  that  this 
had  any  practical  effect.3  In  1875  it  was  provided  that 
the  valuation  made  in  the  statement  of  the  railroad 
company  should  not  be  conclusive,  but  that  the  Assessor 

'See  page  129. 

238  Nev.  505.     See  page  130. 

"Statutes  of  Nevada,  1873,  p.  66. 


124  TAXATION  IN  NEVADA 

should  value  and  assess  according  to  his  judgment.1 
The  word  "railroad"  was  defined  more  specifically  to 
include  the  rails,  ties,  couplings,  spikes,  bridges,  culverts, 
tunnels,  cuts,  fills,  embankments,  the  land  owned  by  the 
right  of  way,  and  all  structures,  fixtures,  improvements, 
and  buildings  owned  thereon  or  used  in  connection 
therewith.  It  was  also  provided  in  this  act  that  the  part 
of  a  railroad  within  a  county  should  be  assessed  as  an 
integral'part  of  a  complete,  continuous  operated  line. 

The  creation  of  the  State  Board  of  Assessment  and 
Equalization  in  1891  involved  a  temporary  advance  in 
the  administrative  procedure  for  the  assessment  of  rail- 
roads.2 The  board  was  authorized  to  assess  the  main  line 
of  all  railroads  and  all  rolling  stock  at  their  actual  cash 
value  and  to  apportion  the  value  among  the  various 
counties  according  to  the  number  of  miles  of  main  track. 
The  railroad  companies  were  required  to  report  to  this 
board  statistics  as  to  earnings,  debt,  stock,  dividends, 
etc.  Through  the  action  of  this  central  agency,  which 
had  original  power  of  assessment  in  the  case  of  railroads 
and  the  power  of  review  in  the  case  of  all  other  prop- 
erty, there  was  a  general  advance  in  valuations.  A  com- 
parison of  the  valuations  of  1892,  the  second  year  of 
the  operation  of  this  law,  with  those  of  1890,  the  last 
year  of  the  old  system,  shows  that  the  total  value  of 
property  generally  was  advanced  by  26  per  cent;  that 
of  the  Central  Pacific  Railroad  by  32  per  cent ;  the  total 
of  all  other  railroads  by  10.7  per  cent;  while  that  on 
all  property  excepting  railroads  was  raised  26.1  per 
cent.  These  figures  do  not  tell  the  whole  story,  but  they 

'Statutes  of  Nevada,  1875,  p.  105. 

'Statutes  of  Nevada,  1891,  p.  57.     See  Chapter  III. 


PUBLIC  UTILITIES  125 

do  show  that  a  little  larger  part  of  the  taxes  were  laid 
upon  the  Central  Pacific  Railroad,  while  the  share  of 
the  other  railroads  was  reduced — a  reduction  probably 
justified  by  the  fact  that  these  roads  were  in  fact 
decreasing  in  value  due  to  the  decay  of  the  mining 
camps  which  they  served.  The  law  appears  to  have  been 
a  wise  one  in  that  it  aimed  to  secure  more  equal  assess- 
ments and  in  that  it  provided  a  central  agency  with  ade- 
quate power.  It  appears  that  the  board  achieved  a 
reasonable  degree  of  success  along  right  lines,  but  the 
plan  met  with  strong  opposition,  mainly  for  reasons  not 
connected  with  the  assessments  of  railroads,  and  the 
board  was  abolished  in  1893. l  Needless  to  say,  the  return 
to  the  old  system  of  uncontrolled  local  assessments 
resulted  in  a  marked  reduction  in  the  total  of  all  valu- 
ations. By  1894  the  value  of  the  Central  Pacific  was 
back  almost  to  the  1890  standard ;  that  of  other  railroad 
property  was  only  about  two-thirds  of  the  1890  valu- 
ation, while  property  other  than  railroads  was  assessed 
for  a  little  less  than  the  valuation  of  1890.  Apparently 
the  good  work  of  the  board  was  entirely  lost. 

As  long  as  railroads  were  assessed  by  the  various  local 
Assessors,  each  acting  independently,  there  was  sure  to 
be  some  lack  of  uniformity  due  to  the  personal  equation, 
and  at  times  this  was  serious.  This  defect  was  overcome 
finally  in  1901  when  the  State  Board  of  Assessors  was 
created.2  Under  this  board  the  value  of  each  railroad 
was  fixed  at  a  uniform  rate  per  mile  for  all  counties, 
and  a  similar  procedure  has  been  followed  by  the  State 
Tax  Commission  since  1912. 

'Statutes  of  Nevada,  1893,  p.  43. 
-See  Chapter  III. 


]26  TAXATION  IN  NEVADA 

&:•'  r»  V  W^W (TV  r  f  i        I  T"~'«! 

In  the  nine  years  from  1903-1912  the  valuation  of  the 
main  line  of  the  Central  Pacific  Railroad  increased  by 
107  per  cent;  that  of  all  other  railroads  (chiefly  on 
account  of  new  construction)  by  795  per  cent;  that  of 
all  other  property  by  157  per  cent.  This  was  a  period 
of  rapid  gains  in  actual  value  for  railroads  and  for  other 
property  as  well.  Consequently  the  advance  in  valua- 
tions represents  in  part  a  real  advance  in  value  and,  in 
part,  a  gain  in  the  effectiveness  of  assessments.  While 
it  is  not  possible  to  establish  the  conclusion  as  definitely 
as  desirable,  it  is  probable  these  efforts  of  the  Assessors 
to  make  valuations  conform  to  the  legal  requirements 
were  more  successful  in  the  case  of  the  railroads  than 
in  the  case  of  other  forms  of  property.  Because  of  their 
importance  rather  more  care  would  be  exercised  than 
in  the  case  of  other  public  utilities.  The  nature  and 
character  of  the  property  was  pretty  well  understood. 
The  unit  of  assessment  was  the  linear  mile  of  line,  and 
the  number  of  miles  in  each  county  was  a  matter  of 
accurate  knowledge — not  a  mere  matter  of  estimate  as 
in  the  case  of  the  number  of  cattle  and  sheep.  Further- 
more, the  Railroad  Commission  created  in  1907  was  able 
to  give  the  Assessors  expert  information  relative  to  the 
value  of  railroads.  The  facts  as  to  the  growing  earn- 
ings of  railroads  and  as  to  the  value  of  their  stocks  and 
bonds  were  pretty  fully  known,  while  the  data  as  to  the 
rental  values  and  the  selling  values  of  land  and  as  to 
the  earnings  of  other  public  utilities  were  much  less 
accurate  and  complete.  Moreover,  the  railroad  com- 
panies were,  in  relation  to  the  work  of  this  commission, 
placing  a  rather  high  valuation  on  their  properties  in 


PUBLIC  UTILITIES  127 

the  interest  of  justifying  their  rates  for  transportation. 
This,  of  course,  made  it  a  little  awkward  to  contend  for 
much  lower  valuations  for  purposes  of  taxation.  Then 
there  was  a  more  or  less  general  opinion  that  the  rates 
for  transportation  were  excessive  and  discriminatory 
toward  Nevada,  and  also  that  the  railroads  were  not 
paying  their  fair  share  of  the  taxes.  In  short,  public 
opinion  was  such  that  any  movement  looking  to  higher 
assessments  for  the  railroads,  especially  for  the  Central 
Pacific,  was  likely  to  be  politically  popular.  As  a  con- 
sequence of  these  things,  by  1912  the  railroads,  including 
railroad  lands,  were  assessed  at  an  amount  more  than 
four-fifths  as  great  as  the  assessed  value  of  all  other 
property,  and  they  were  paying  a  larger  part  of  the  taxes 
than  would  have  been  required  of  them  under  equal  and 
uniform  assessments. 

THE  TAXATION  OF  OTHER  PUBLIC  UTILITIES 
Relative  to  the  assessment  of  public  utilities  other 
than  railroads  there  was  no  special  legislation  prior  to 
1903,  when  the  State  Board  of  Assessors  was  authorized 
and  directed  to  establish  the  value  of  railroads,  tele- 
graph and  telephone  lines,  and  electric  light  and  power 
lines.  While  this  act  was  held  to  be  mandatory  with 
reference  to  the  public  utilities  named,  the  Assessors 
did  not  collectively  establish  valuations  for  the  telephone 
and  power  lines  and,  not  until  1911,  did  they  fix  the 
value  of  any  telegraph  line.  In  1910  the  Governor  tried 
to  secure  action  in  relation  to  such  property,  but  the 
Assessors  refused  on  the  ground  that  they  did  riot  know 
enough  about  the  property  concerned  to  enable  them  to 


128  TAXATION  IN  NEVAI>.\ 

make  a  just  classification  and  valuation.  They  did,  how- 
ever, establish  a  valuation  for  the  Wells  Fargo  Express 
Company  and  for  the  Pullman  Company,  using  informa- 
tion furnished  by  the  Railroad  Commission  as  a  basis 
for  their  action.  In  1911  they  established  a  wire-mile 
valuation  for  the  Western  Union  Telegraph  Company 
and  left  other  telegraph  companies  to  be  valued  by  the 
Assessors  individually.  In  1912  the  American  Express 
Company  and  the  Globe  Express  Company  were  added 
to  the  list  of  corporations  whose  valuations  were  estab- 
lished by  the  state  board. 

Apparently  one  of  the  chief  difficulties  in  the  way  of 
adequate  assessments  for  the  public  utilities  was  the  fact 
that  the  Assessors  knew  very  little  about  the  character  of 
the  properties.  They  had  no  reliable  data  as  to  costs, 
earnings,  dividends,  debts,  etc.  Most  of  them  did  not 
understand  the  principle  of  valuation  for  intangible 
property.  The  State  Railroad  Commission,  which  in 
1911  was  made  a  public-service  commission,  brought  an 
element  of  experience  to  the  aid  of  the  Assessors. 

EXPRESS  COMPANIES 

The  oldest  of  the  important  public-utility  corpora- 
tions doing  business  in  Nevada  is  the  Wells  Fargo 
Express  Company  which,  in  the  early  mining  period, 
had  developed  a  large  business  in  the  transportation  of 
gold  and  silver  bullion  seven  or  eight  years  before  the 
first  railroad  was  built  to  Nevada.  While  there  are  at 
present  two  other  express  companies  doing  business  in 
Nevada,  their  business  is  relatively  so  small  that  they 


PUBLIC  UTILITIES  129 

may  be  neglected  in  the  discussion  of  the  taxation  of 
such  corporations. 

The  most  striking  fact  in  connection  with  the  taxa- 
tion of  the  Wells  Fargo  Express  Company  is  that  until 
very  recent  years  the  intangible  property  escaped  taxa- 
tion. The  tangible  property  consists  of  a  few  horses 
and  wagons  and  a  little  office  furniture,  while  the  value 
of  the  intangible  property  is  a  hundred  times  as  great. 

Perhaps  it  was  a  recognition  of  this  peculiar  condi- 
tion that  led  the  early  Legislatures  to  establish  a  system 
of  licenses  for  the  express  company  with  rates  graduated 
according  to  business.  The  territorial  laws  of  1861  pro- 
vide for  licenses  with  graduated  rates  varying  from  $15 
to  $100  a  quarter  for  all  common  carriers  engaged  in 
the  transmitting  or  carrying  of  gold  dust,  gold  or  silver 
coin,  or  gold  or  silver  bullion  from  a  point  within  the 
State  to  another  point  within  the  State  or  from  a  point 
within  the  State  to  a  point  outside  of  the  State.1  Such 
taxes  were  payable  for  each  office  maintained  by  the 
company.  The  first  State  Legislature  changed  the  pro- 
visions of  the  law  and  established  rates  varying  from 
$50  to  $200  a  month,  according  to  the  amount  of  busi- 
ness. In  1875  the  graduated  scale  was  abolished  and  a 
flat  rate  of  $150  a  quarter,  to  be  paid  but  once  in  each 
county  was  established.2  This  tax  was  abolished  in  1915. 

The  total  state  and  local  ad  valorem  taxes  of  the  Wells 
Fargo  Company  for  1909  amounted  to  $2,657.74.3  This 

'A  license  tax  on  the  interstate  business  of  an  express  company  gradu- 
ated according  to  the  amount  of  such  business  would  be  in  effect  a  tax  on 
interstate  commerce  and  as  such  would  exceed  the  power  of  the  state  gov- 
ernment. (See  Cooley  on  Taxation,  3d  ed.,  vol.  1,  p.  157.) 

Statutes  of  Nevada,  1875,  p.  144. 

•"Minutes  of  state  meetings  of  Assessors  for  1910,  p.  117. 
5 


130  TAXATION  IN  NEVADA 

would  represent  a  valuation  of  not  far  from  $150,000. 
According  to  the  data  furnished  by  the  Public  Service 
Commission,  the  value  of  the  property,  tangible  and 
intangible,  was  $4,000,000.  This  value  was  found  by 
capitalizing  the  net  earnings  of  the  company  on  its 
Nevada  lines  at  about  seven  per  cent.  The  property  was 
assessed  at  a  valuation  of  about  $510,000  in  1910. 

This  assessment  was  contested  in  the  courts,  the  express 
company  contending  that  in  a  certain  county  the  total 
property  owned  by  it  was  worth  only  $383.98,  while  it 
was  assessed  at  a  value  of  more  than  $42,000 — a  sum 
more  than  a  hundred  times  as  great  as  the  real  value. 
The  company  was,  of  course,  considering  merely  its 
physical  property — a  little  office  furniture — while  the 
Assessor  had  counted  in  the  value  of  the  intangible 
property.  The  dictum  of  the  Supreme  Court  in  the  case 
of  the  Central  Pacific  Railway  Company  was  quoted  in 
support  of  the  express  company's  contention.1  The 
decision  of  the  court  fully  sustained  the  action  of  the 
Assessors  on  the  ground  that  the  value  of  intangible 
property  is  taxable  and  that  the  situs  of  such  property  is 
where  the  tangible  property  is  located  and  where  the 
work  is  done.2  The  case  is  now  before  the  United  States 
Supreme  Court  on  appeal. 

In  1911  the  Legislature  enacted  a  special  law,  accord- 
ing to  which  the  value  of  the  property  of  express  com- 
panies is  determined  by  capitalizing  their  net  earnings 
at  8%.3  The  actual  valuations  for  1911  and  1912  were 
essentially  the  same  as  those  for  1910.  In  1913  the 

'See  page  122. 

-38  Nev.  505. 

"Nevada  Statutes,  1911,  p.  391. 


PUBLIC  UTILITIES  131 

Wells  Fargo  Company  was  assessed  for  $1,137,073  as 
against  less  than  one-seventh  of  this  amount  in  1909  and 
less  than  one-half  in  each  of  the  next  three  years.  It  is 
probable,  too,  that  at  the  time  of  this  marked  increase 
in  assessed  valuations  the  value  of  the  property  had 
suffered  a  serious  decrease  through  the  competition  of 
the  new  parcels  post  and  through  the  decrease  in  express 
rates  ordered  by  the  Interstate  Commerce  Commission. 
The  following  year  the  valuation  was  reduced  to 
$425,741. 

The  valuations  of  most  public  utilities  other  than 
railroads  have  been  advanced  considerably  since  the 
creation  of  the  State  Tax  Commission,  partly  because 
of  the  new  provision  of  the  law  relative  to  the  value  of 
intangible  property,  partly  because  of  the  zealous  activ- 
ity of  the  commission.  The  assessments  of  1913  were 
originally  made  by  the  State  Board  of  Assessors,  but 
they  were  equalized  by  the  Tax  Commission.  In  this 
equalization  the  commission  advanced  the  total  valua- 
tions of  a  considerable  number  of  public  utility  corpora- 
tions by  54  per  cent.  A  further  increase  of  193  per 
cent  of  the  total  of  all  electric  companies  and  of  75  per 
cent  for  gas  companies  and  58  per  cent  for  water  com- 
panies, of  71  per  cent  for  street-car  and  electric  railway 
lines,  of  64  per  cent  for  telephone  and  telegraph  lines 
was  made  in  1914.  In  one  instance  the  value  as  equalized 
in  1914  was  over  thirteen  times  as  great  as  the  value  as 
originally  assessed  the  previous  year.  With  a  few  excep- 
tions these  increases  represent  not  a  gain  in  actual  value, 
but  more  efficient  assessments. 


132  TAXATION  IN  NEVADA 

THE  SITUS  OF  PROPERTY  OF  PUBLIC-UTILITY 

CORPORATIONS 

The  Tax  Commission  Act  of  1913  provides  for  the 
assessment  of  the  property  of  public-utility  corporations 
including  both  tangible  and  intangible  property  as  a 
collective  unit,  the  value  of  such  property  in  any  county 
to  be  in  proportion  to  mileage.  The  language  of  the  law 
is  as  follows : 

The  property  of  all  railroad,  sleeping-car, 
street-railway,  traction,  telegraph,  telephone, 
and  electric  light  and  power  companies,  together 
with  the  franchises  under  which  the  same  may 
be  operating,  and  the  property  and  franchises 
of  all  express  companies  operating  on  any  com- 
mon carrier  in  this  State,  and  which  foregoing 
shall  be  assessed  as  follows:  Said  commission 
shall  establish  the  valuation  of  the  franchises, 
roadways,  road-beds,  rails,  bridges,  rolling 
stock,  poles,  wires,  fences,  pipes,  canals,  con- 
duits, rights  of  way,  and  other  property,  or  any 
part  thereof  used  directly  in  the  operation  of 
any  such  business  of  any  such  company  in  this 
State,  as  a  collective  unit;  and  if  operating  in 
more  than  one  county,  on  establishing  such  unit 
valuation  for  the  collective  property  said  com- 
mission shall  then  proceed  to  determine  the  total 
aggregate  mileage  operated  within  the  State, 
and  within  the  several  counties  thereof,  and  so 
apportion  the  same  upon  a  mile-unit  valuation 
basis,  and  the  number  of  miles  so  appor- 
tioned to  any  county  shall  be  subject  to  assess- 
ment in  that  county  according  to  the  mile-unit 
valuation  so  established  by  said  commission.  The 
word  "companies"  shall  be  construed  to  mean 
and  include  any  person  or  persons,  company, 


PUBLIC  UTILITIES  133 

corporation,  or  association  engaged  in  the  busi- 
ness described. 

In  its  administration  of  this  provision  the  Tax  Com- 
mission has  interpreted  the  word  "company"  in  two 
ways — in  one  way  for  railroads  and  in  another  way  for 
other  public-utility  property.  In  the  case  of  a  railroad 
company  which  owns  a  main  line  and  a  branch  line  the 
property  has  been  assessed  not  as  one  collective  unit, 
but  as  two  collective  units,  the  branch  line  being  assessed 
separately  as  if  it  were  owned  by  a  separate  company. 
In  the  case  of  express  lines  and  other  utilities  a  branch 
line  is  included  with  the  main  line  owned  by  the  same 
company  and  both  are  assessed  as  one  collective  unit. 
For  example,  the  Fernley  and  Lassen  branch  of  the 
Central  Pacific  Railroad  under  the  direct  ownership  of 
the  company  which  owns  the  main  line  of  the  Central 
Pacific  is  assessed  as  a  separate  unit  at  an  all-track 
valuation  of  $17,258.45  per  mile,  while  the  main  line  is 
valued  at  $30,451.84  per  mile.1  On  the  other  hand,  the 
property  of  the  Wells  Fargo  Express  Company,  which 
operates  both  on  the  main  line  and  the  branch,  is 
assessed  as  a  collective  unit,  and  the  valuation  in  each 
county  was  $300  per  mile  on  the  main  line  and  on  the 
branch. 

The  procedure  used  for  the  railroads  was  most  nearly 
in  harmony  with  those  general  principles  of  law  which 
determine  the  situs  of  property  for  purposes  of  taxa- 
tion, but  it  does  not  appear  to  be  warranted  by  the 
language  of  this  specific  act  which  requires  that  the 
property  be  assessed  as  a  collective  unit,  not  as  two  or 

'The  figures  are  for  1914. 


134  TAXATiOX  IN  NEVADA 

more  collective  units.  The  procedure  followed  in  the  case 
of  the  other  public-utility  companies  appears  to  be  in 
strict  conformity  with  the  law,  but  it  has  the  effect  of 
transferring  a  considerable  amount  of  value  from  the 
counties  in  which  it  is  found  to  other  counties.  For 
example,  the  business  of  the  Wells  Fargo  Express  Com- 
pany is  carried  on  chiefly  over  the  main  line  of  the 
Central  Pacific  Railroad,  and  the  value  of  the  property 
of  this  corporation,  which  is  nearly  all  intangible,  must 
attach  mainly  to  the  line  of  railroad  on  which  it  does 
most  of  its  business  and  makes  most  of  its  net  earnings. 
The  courts  have  held  that  the  value  of  intangible  prop- 
erty is  taxable  and  that  the  situs  of  such  property  is 
where  the  tangible  property  is  and  where  the  work  is 
done.  The  logical  implication  of  this  doctrine  is  that 
the  valuation  of  an  express  company  should  be  appor- 
tioned with  some  reference  to  the  amount  of  business — 
to  the  amount  of  work  done  and  to  the  amount  of  net 
earnings. 

In  the  absence  of  information  as  to  the  actual  value 
of  the  express  business  on  any  particular  line  of  railroad, 
it  may  be  assumed  that  the  express  business  tends  to 
correspond  to  the  railroad  business ;  where  there  is  heavy 
railroad  traffic  there  will  be  much  express  business,  and 
where  the  railroad  has  little  to  do  there  will  be  little 
express  business.  On  the  assumption  that  the  value  of 
the  various  express  lines  owned  by  the  Wells  Fargo 
Company  have  a  value  proportional  to  that  of  rail- 
roads over  which  they  operate,  it  appears  that  the  pro- 
cedure of  "collective-unit"  valuation,  taken  in  connection 
with  the  mile-unit  apportionment,  has  the  effect  of  trans- 


PUBLIC  UTILITIES  135 

ferring  more  than  one-fifth  of  the  collective  value  from 
counties  in  which  the  property  is  found  to  other  coun- 
ties, and,  in  the  case  of  certain  counties,  the  ratio  of 
transfer  is  much  greater.  One  county  loses  over  half 
of  its  valuation ;  another  is  given  a  valuation  more  than 
seven  times  as  great  as  the  actual  value  found  therein. 
When  the  express  business  over  the  Nevada  Central  Rail- 
road is  valued  at  the  same  rate  per  mile  as  the  express 
on  the  Central  Pacific  where  the  density  of  traffic  is 
more  than  one  hundred  times  as  great,  it  is  evident  that 
there  is  a  transfer  of  value  from  Humboldt  County  to 
Lander  County. 

Under  the  operation  of  this  law,  similar  transfers  may 
be  made  in  the  case  of  other  public  utilities,  but  the 
actual  amount  transferred  varies  according  to  the  nature 
of  the  utility.  For  example,  if  there  were  a  hydro- 
electric power  company  with  highly  valuable  power 
site  and  plant  near  the  eastern  border  of  one  county, 
with  a  long  transmission  line  to  the  east  across  the 
next  county,  and  with  good  market  for  power  at  a 
mine  and  reduction  plant  in  a  third  county  near  its 
western  border,  the  assessment  procedure  would  give 
nearly  all  the  value  to  the  middle  county  across  which 
its  transmission  lines  run,  even  though  the  whole  region 
along  the  line  were  an  uninhabited  desert. 

Undoubted  progress  has  been  made  in  the  taxation  of 
public  utilities,  but  much  remains  to  be  done.  Under 
our  present  system  of  control  of  public  utilities,  taxes  on 
such  property  are  pretty  sure  to  be  shifted  to  the  con- 
sumer. When  a  railroad  company  goes  before  the  State 
Railroad  Commission  or  the  Interstate  Commerce  Coin- 


136  TAXATIOX  /A"  NEVADA 

mission  to  ask  for  an  increase  in  freight  rates,  it  presents 
a  statement  of  income  and  expenditures  to  justify  its 
claims.  Since  the  commissions  are  bound  to  grant  rates 
sufficient  to  permit  of  reasonable  net  earnings,  it  follows 
that  the  taxes  are  shifted  through  an  increase  in  freight 
rates  and  that  the  ultimate  burden  falls  on  the  consumer 
or  the  business  interests  of  the  community.  In  similar 
ways  are  the  taxes  of  other  public-utility  corporations 
shifted.  It  will  not  be  possible  to  establish  a  just  system 
of  taxation  for  such  property  until  the  final  incidence  or 
ultimate  burden  of  the  taxes  is  considered,  and  in  order 
that  such  consideration  may  be  of  most  practical  value, 
there  must  be  some  change  in  the  constitution  permitting 
of  a  classification  of  taxable  property. 

The  following  table  shows  the  valuations  on  which  ad 
valorem  taxes  have  been  levied  from  1865  to  1916,  classi- 
fied as  follows : 

1.  Net  proceeds  of  mines. 

2.  The  Central  Pacific  Railroad;    land-grant  lands 

excluded  after  1886  and  branch  lines  excluded. 
Data  available  after  1883. 

3.  Land-grant  lands  owned  by  the  Central  Pacific 

Railroad. 

4.  All  railroads  other  than  the  Central  Pacific,  and 

including  the  branch  lines  of  that  road. 

5.  All  property  assessed  prior  to  1884,  and  all  prop- 

erty   except    railroads,    beginning    with    1884. 
Land-grant  lands  excluded  after  1886. 


GENERAL  STATISTICS 


137 


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GKNERAL  STATISTICS  139 

PER  CENT  OF  STATE  TAXES  ASSESSED  TO  EACH  CLASS  OK  PROPERTY 
Central  Pacific 


1 

Date 
1865 

<!et  proceeds 
of  mines 
6.5 

Railroad 
main  line 

Land-grant 
lands* 

Other 
railroads 

Other 
property1 

:i:;  i 

1866 

4.7 

95° 

1867 

26.8 

73  1 

1868 

25.7 

74  1 

1869 

13.9 

86.0 

1870 

23.0 

"i;  '• 

1871 

27.3 

726 

1872 

25.4 

744 

1873 

34.5 

65.3 

1874 

34.2 

656 

1875 

36.7 

<53  ° 

1876 

44.9 

55  0 

1877 

44.7 

55.1 

1878 

45.1 

54.8 

1879 

19.8 

80.1 

1880 

14.0 

85.9 

1881 

8.2 

91.7 

1882 

5.9 

940 

1883 

5.5 

94.4 

1884 

5.1 

22.0 

9.6 

63.2 

1885 

3.4 

22.4 

10.0 

64.0 

1886 

2.1 

23.5 

9.9 

64.4 

1887 
1888 
1889 
1890 
1891 
1892 
1893 
1894 
1895 
1896 
1897 
1898 
1899 
1900 
1901 
1902 
1903 
1904 

5.5 
7.3 
4.6 
2.7 
2.5 
.7 
.6 
.7 
.7 
1.5 
1.9 
1.4 
.5 
.4 
1.0 
1.7 
1.3 
2.4 

22.5 
21.5 
22.1 
24^0 
24.7 
25.6 
24.7 
26.4 
26.6 
27.0 
26.8 
26.6 
26.5 
26.1 
28.6 
27.0 
27.4 
23.7 

.9 
1.2 
1.5 
1.4 
1.3 
1.2 
1.2 
1.3 
1.5 
1.6 
1.9 
1.9 
2.0 
2.0 
1.9 
1.9 
4.0 
7.4 

7.9 
8.9 
9.0 
9.5 
8.7 
8.5 
7.5 
6.9 
7.6 
7.3 
7.0 
6.7 
6.2 
6.0 
5.5 
6.3 
6.0 
6.1 

63.0 
61.2 
62.7 
62.2 
62.6 
63.S 
65.9 
C4.4 
67.5 
62.5 
62.3 
(53.2 
(U.7 
65.3 
63.0 
63.0 
61.1 
60.2 

'Before  1884  all  assessed  property  is  included  in  this  column. 
-From  1884  to  1886,  inclusive,  the  land-grant  lands  are  included  with  the 
railroad. 


140  TAXATION  IN  NEVADA 

PER  CENT  OF  STATE  TAXES — Continued 

1905                3.6              21.3                5.8              11.1  r,s.n 

1006  5.0              20.3                5.8              12.6  r,r,.i 

1007  0.5              14.0                4.4              1.1.7  56.2 

1008  4.1              13.4               4.4             ir>.0  »;i.«.» 
1900                7.2             13.8               5.5             13.8  59.5 

1910  10.1      17.6       4.4      14.9  52.7 

1911  10.3      17.9       5.3      15.7  50.6 

1912  8.6      18.6       4.6      17.6  50.4 

1913  3.9      17.7       4.8      20.9  51.6 

1914  2.6      15.5       5.2      10.2  57.2 

1915  4.9      16.4       4.5      19.2  54.8 

1916  8.5      16.2      4.3      19.1  51.7 

A  more  detailed  classification  of  assessed  property  is 
given  for  the  year  1916. 

Assessed  Percent 

•n    i.i'     -nfi-f                                                    valuation  total 

PUOUO  Utilities —                                             fw  1916  valuation 

Central  Pacific  Railroad — Main  line $28,348,800  16.2 

Central  Pacific  Railroad— Branch  lines....    6,071,316  3.4 

Total  Central  Pacific  Railroad 34,420,116  19.7 

All  other  railroads 27.261,448  15.6 

Total  for  all  railroads 61,681.564  35.3 

Other  public  utilities 10.141,651  5.8 

Total  public  utilities 71,823,215  41.1 

Railway  laud-grant  land $7,569,395  4.3 

Agriculture  and  Stock  Raising 

Land  (Railroad  land  excluded) $23,567,276  13.5 

Live  stock 14.300,000  8.2 

Buildings  and  improvements 2,172,865  1.2 

Other  personal  property 1.222.362  .7 


Total $41,262.503  23.6 

Mine* 

Net  proceeds  of  mines $14.860,569  8.5 

Patented  mining  land 2.187,843  1.2 

Mine  improvements  and  mills 9.267,296  5.3 


Total $26,315.708  15.0 


GENERAL  STATISTICS  141 

City  and  Town  Property 

Land $8,308,035  4.7 

Live  stock 706,601  .4 

Buildings  and  improvements 10,179,441  5.8 

Banks 2,595,486  1.4 

Merchandise 2,403;179  1.3 

Other  personal  property 1,502,171  .8 


Total  city  and  town  property $25,694,913  14.7 

Miscellaneous  Property  Not  Included  Above 

Motor  vehicles $1,063,868  .6 

Pipe  lines  and  water  rights  (part) 248,630  .1 

Miscellaneous  personal  property  on  which 

late  collections  were  made....                      492,894  .2 


Total $1,805,392  1.0 

Main  Classes 

Public  utilities $71,823,215  41.1 

Railroad-grant  lands 7.569,395  4.3 

Agriculture  and  stock  raising 41.262.503  23.6 

Mines 26.315,708  15.0 

City  and  town  property 25,694,913  14.7 

Miscellaneous 1,805.392  1.0 


Total $174,471,126  100.0 


CHAPTER  VI 
THE  INHERITANCE  TAX 

Nevada  made  no  provision  for  the  collection  of  an 
inheritance  tax  until  1913. x  The  chief  provisions  of  the 
act  of  that  year  are  as  follows:  (1)  The  tax  is  imposed 
upon  direct  as  well  as  collateral  inheritances.  (2)  The 
law  applies  to  all  property  in  the  State  without  refer- 
ence to  the  residence  of  the  owner,  also  to  the  ownership 
of  shares  of  corporate  stock  of  corporations  owning 
property  in  Nevada,  and  to  notes  secured  by  mortgage 
on  real  estate  situated  in  the  State.  (3)  Provision  is 
made  for  exemptions  amounting  to  from  $5,000  to 
$20,000  according  to  the  degree  of  relationship,  but 
strangers  in  blood  and  persons  related  in  remote  degree 
are  not  entitled  to  any  exemption.  (4)  The  primary  rates 
apply  to  inheritances  amounting  to  not  over  $25,000  in 
excess  of  the  exemption,  and  the  tax  varies  from  one 
per  cent  to  five  per  cent,  according  to  the  degree  of 
relationship.  (5)  For  inheritances  in  excess  of  $25,000. 
the  rates  are  graduated  into  four  classes  and  the  tax  is 
two,  three,  four,  and  five  times  the  primary  rate  for  the 
respective  increments  of  excess — the  maximum  rates 
applying  to  the  excess  over  $500,000.  A  remote  relative 
who  inherits  more  than  a  half  million  dollars  is  required 
to  pay  a  tax  of  twenty-five  per  cent.  (6)  The  revenue 
received  from  inheritance  taxes  is  apportioned  between 
the  State  and  the  county  in  which  the  property  is  situ- 

'Statutes  of  Nevada,  1913,  p.  411. 


THE  INHERITANCE  TAX  143 

ated,  the  county  receiving  twenty  per  cent  and  the  State 
eighty  per  cent.  One-half  of  the  revenue  received  by 
the  State  is  placed  in  the  general  fund  and  one-half  in 
the  permanent  school  fund. 

Since  an  unusually  large  part  of  the  property  of 
Nevada  is  owned  in  large  holdings,  it  is  probable  that  an 
inheritance  tax  will  yield  greater  revenues  in  proportion 
to  population  than  in  any  other  State.  Since  most  of  the 
property  of  Nevada,  including  land  as  well  as  mines  and 
public  utilities,  is  in  corporate  ownership,  it  is  pretty 
certain  that  the  inheritance  of  shares  of  corporate  stock 
will  yield  most  of  the  revenue.  Since  most  of  the  cor- 
porate property  of  the  State  is  owned  by  nonresidents,  it 
is  probable  that  most  of  the  tax  will  be  paid  by  nonresi- 
dents. 

Since  the  property  subject  to  the  inheritance  tax  is 
owned  by  a  comparatively  small  number  of  people, 
and  since  the  ownership  is  characterized  by  great  ine- 
quality, the  revenues  derived  from  this  source  will  be 
highly  variable,  some  years  yielding  amounts  that  will 
be  very  great  in  proportion  to  the  total  revenues  of  the 
State  or  of  a  county,  while  other  years  will  yield  little 
or  nothing.1  This  will  create  a  very  undesirable  revenue 
situation  for  several  reasons.  When  large  unexpected 
returns  are  received  there  is  a  temptation  to  make 

'The  total  revenue  received  by  the  State  Treasurer  from  inheritance 
taxes  for  each  year  since  the  enactment  of  the  law  have  been  as  follows : 

1914 $193.62 

1915 4,415.10 

1916 3,887.22 

A  recent  court  decision  (1917)  awards  a  total  revenue  of  $50,000  from 
one  estate.  It  is  quite  conceivable  that  a  single  estate  might  pay  an  inheri- 
tance tax  of  a  half  million  dollars,  and  that  the  taxes  from  several  of  the 
larger  estates  might  be  paid  in  one  year. 


144  TAXATION  IN  NEVADA 

unwarranted  expenditures,  and  this  is  pretty  sure  to  neces- 
sitate needless  taxes  at  a  later  date.  On  the  other  hand, 
the  receipt  of  unusually  small  revenues  might  make  it 
difficult  for  the  State  to  meet  its  necessary  expenditures. 
In  short,  the  inheritance  tax  introduces  an  unpredictable 
element  into  the  budget.  It  would  be  possible,  of  course, 
for  the  State  or  the  county  in  the  following  year  to  effect 
a  reduction  in  ordinary  taxes  to  an  amount  equal  to  the 
revenue  from  inheritance,  but  this  would,  at  times, 
involve  an  undesirable  irregularity  in  the  tax  rate. 

So  far  as  the  receipts  from  this  source  are  placed  in 
the  permanent  school  fund,  this  difficulty  is  obviated. 
It  would  be  highly  desirable  to  make  some  provision  for 
the  remainder  of  these  revenues  or  for  all  above  a  cer- 
tain maximum — so  that  they  would  not  go  into  current 
expenditures  where  they  are  sure  to  become  a  disturbing 
element.  I  suggest  that  the  irredeemable  state  bonds 
amounting  to  $380,000 — an  unfortunate  legacy  from 
territorial  days — be  made  redeemable  at  the  convenience 
of  the  State  and  that  the  State  devote  all  of  the  inheri- 
tance revenues  above  a  given  maximum  allowed  for  cur- 
rent use  to  the  retirement  of  these  bonds.1  A  provision 
could  be  made  for  the  use  of  such  revenues  by  counties  to 
establish  sinking  fvinds  to  retire  bonds  as  they  might 
mature. 

'Since  these  bonds  are  all  owned  by  the  state  school  fund  there  would  be 
no  contractual  difficulty  in  the  way  of  such  an  arrangement. 


CHAPTER  VII 
LICENSE  AND  OTHER  BUSINESS  TAXES 

License  taxes  are  of  two  general  classes:  (1)  Licenses 
for  revenue  pure  and  simple ;  (2)  Licenses  for  regulation 
with  revenue  incidental.  The  regulatory  license  may, 
and  often  does,  yield  a  larger  revenue  than  the  pure 
revenue  license,  but  whether  the  yield  be  much  or  little, 
is  determined  by  regulatory  not  revenue  considerations. 

The  regulatory  license  is  merely  nominal  where  the 
aim  is  to  encourage  the  business  while  putting  it  under 
such  supervision  as  may  be  essential  to  health,  safety,  or 
other  public  interest.  The  dairyman's  milk  permit  is 
such  a  license.  On  the  other  hand,  if  a  business  is 
regarded  as  more  or  less  harmful,  tending  toward  dis- 
order or  public  injury,  the  rate  is  made  higher,  partly 
with  the  idea  of  restriction,  and  partly  to  compensate  the 
community  for  the  special  expenses  of  police  and  courts. 
The  saloon  license  and  some  amusement  licenses  are  of 
this  character. 

Ordinarily  the  business  for  which  a  regulatory  license 
is  required  is  conducted  under  certain  regulations  sup- 
posed to  conserve  the  interests  of  the  public,  and  some 
courts  have  held  that  a  license  cannot  be  considered 
regulatory  unless  there  are  such  provisions.  From  the 
economic  standpoint  the  tax  itself  may  be  regulatory,  if 
the  rate  is  sufficiently  high,  and  if  it  is  imposed  in  a 
manner  appropriate  to  the  purpose.  For  example,  the 
sheep  license  imposed  on  nonland  owners  does  tend  to 
eliminate  the  tramp  stockmen  and  to  promote  order  and 


146  TAXATION  IN  NEVADA 

range  conservation,  even  though  there  is  no  regulatory 
provision  aside  from  the  tax  itself. 

Very  high  flat-rate  licenses  do  not  impose  a  burden 
upon  the  business  as  a  whole,  since  they  may  be  positively 
beneficial  to  some  competitors  while  destroying  others. 
For  instance,  if  Nevada  were  to  impose  a  $1,000  license 
upon  all  saloons  it  would  force  many  of  the  smaller 
proprietors  to  quit  business,  and  it  is  probable  that  some 
of  the  larger  saloons  would,  as  a  consequence,  increase 
their  net  gains  by  an  amount  larger  than  the  tax.  Such 
a  tax  is  justified  only  by  regulatory  considerations.  It 
may  be  held  that  police  supervision  is  easier  and  more 
effective  where  the  number  of  saloons  is  small  and  the 
license  high.  Sometimes  the  number  is  arbitrarily 
limited,  and  this  gives  the  license  a  very  high  value  to 
the  holder  because  of  the  restriction  of  competition.  In 
such  cases  this  excess  value  may  be  taken  wholly  or  in 
part  for  public  use  in  the  form  of  a  high  license  tax. 
Ordinarily  a  regulatory  license  is  enforced  in  part  by 
criminal  penalties,  and  some  courts  have  held  that  no 
license  is  to  be  considered  regulatory  unless  such  penalty 
is  imposed. 

COUNTY  REGULATORY  LICENSES 

The  first  revenue  act  imposed  a  license  tax  for  county 
purposes  on  billiards,  bowling  alleys,  theaters,  circuses, 
saloons,  pawn  brokers,  intelligence  offices,  and  peddlers. 
From  time  to  time  the  list  has  been  extended  as  follows : 
Gambling,  1869 ;  drummers,  1877 ;  hury-gurdy  houses, 
1887  ;  prize  fights,  1897  ;  sheep,  1891 ;  cigarettes,  1893 ; 
stationary  engineers,  1905;'  automobiles  for  hire,  1909; 
fishing  and  hunting,  1909. 


LICENSE  AND  OTHER  BUSINESS  TAXES          147 

The  following  license  taxes  are  in  force  at  present : 

Billiard  tables,  $5  per  quarter. 

Bowling  alleys,  $10  per  quarter. 

Theaters  in  places  where  over  300  votes  are  cast,  $5  a  day : 
$20  a  month  ;  $40  a  quarter ;  $75  a  year. 

Circus,  $20  an  exhibition. 

Other  entertainers,  $10  a  day. 

Pawn  brokers.  $100  a  quarter. 

Intelligence  office,  $15  a  quarter. 

Liquor  dealers  (in  city  or  within  one  mile  of  the  city),  $10 
a  month. 

Liquor  dealers  (more  than  a  mile  from  city),  $15  a  quarter. 

Hurdy-gurdy  houses,  $250  a  quarter. 

Glove  contests  (ten  rounds),  $100  a  contest. 

Sale  of  cigarettes,  $15  a  quarter. 

Stationary  engineer,  $5,  payable  once. 

Owner  of  automobiles  for  hire,  $2.50  a  month. 

Peddlers,  $100  a  month. 

Fishing  and  hunting — Citizens  of  Nevada,  $1  a  year;  citizens 
of  other  States,  $10  a  year ;  aliens,  $25  a  year. 

Fishing  (30  days),  $2. 

Sheep  license  for  residents,  for  each  one  thousand  sheep, 
approximately,  $50  a  year. 

Persons  owning  land  in  the  proportion  of  one  acre  to  three 
sheep  are  exempt. 

Sheep  licenses  for  nonresident  nonlaud  owners  per  head,  pay- 
able in  each  county  in  which  sheep  are  grazed,  15  cents  a  year. 

An  examination  of  the  various  laws  in  detail  leads  to 
the  conclusion  that  the  degree  of  regulation  aimed  at 
has  been  variable  but  not  very  prominent  in  relation  to 
several  of  the  above-mentioned  classes  of  business.  Until 
1913  it  was,  apparently,  the  assumption  of  the  law  that 
the  County  Commissioners  were  to  grant  liquor  licenses 
to  all  applicants,  and  this  was  the  practise.  The  power 
to  withhold  a  license  was  expressly  granted  by  an  act  of 
that  year.  Not  until  1903  had  the  power  to  revoke  such 
licenses  on  complaint  been  granted.  In  fact,  about  the 
only  ground  for  considering  the  saloon  license  regulatory 
during  most  of  the  history  of  the  State  is  the  fact  that 


148  TAXATION  IN  NEVADA 

the  license  taxes  were  not  graduated  except  in  a  minor 
degree.  More  recently  the  regulatory  power  so  far  as  it 
relates  to  saloons  in  cities  is  conferred  on  the  city  coun- 
cil so  that  the  county  license  tax  on  city  saloons  is  for 
revenue  only.  A  few  of  the  license  taxes  such  as  those 
on  hurdy-gurdy  houses  and  sheep  may  be  considered  as 
restrictive  by  virtue  of  the  burdens  imposed.  Others, 
such  as  those  on  hunting  and  sheep  grazing,  regulate  by 
means  of  discriminatory  provisions.  In  other  cases  there 
are  specific  regulatory  provisions  as  in  the  case  of  glove 
contests.  In  several  cases  there  is  no  very  good  ground 
for  regarding  the  license  tax  as  regulatory  and  not  a 
mere  revenue  license,  unless  the  need  for  regulation  and 
restriction  be  ground  for  the  imputation  for  such  pur- 
pose. 

There  has  been  a  considerable  amount  of  legislation 
touching  regulatory  licenses,  but  it  does  not  represent 
any  continuous  and  consistent  policy.  Sometimes  cer- 
tain license  taxes  have  been  fixed  at  a  prohibitive  figure 
for  a  few  years,  and  then  the  rate  has  been  reduced, 
apparently  to  encourage  the  business. 

GAMBLING  LICENSES 

Gambling  is  an  evil  which  manifests  itself  most  con- 
spicuously along  the  frontier,  and  particularly  in  fron- 
tier mining  regions  where  good  wages  are  paid  and 
money  is  plenty,  where  the  natural  hazards  of  business 
and  industry  attract  the  adventurous,  and  where  for 
most  men  the  influences  of  home  life  are  wanting. 

The  Mississippi  River,  with  its  teeming  commerce,  was 
the  wild  and  woolly  and  gambling  West  of  the  second 


LICENSE  AND  OTHER  BUSINESS  TAXES          149 

quarter  of  the  last  century.  With  the  discovery  of  gold 
and  silver  in  California  and  Nevada,  the  bold  and 
adventurous  and  the  foot-loose  and  homeless  were 
attracted  to  these  States  in  large  numbers,  and  open 
gambling  became  a  prominent  feature  of  the  life  of 
every  mining  camp  and  city. 

Nevada  began  its  career  as  a  State  by  outlawing  the  vice, 
but  after  four  years  the  State  Controller  reported  that 
the  act  prohibiting  gambling  was  "entirely  inadequate 
and  virtually  of  no  effect  whatever,"  and  he  recom- 
mended a  high  license  tax  as  the  best  means  of  restric- 
tion and  regulation  as  against  Governor  Blasdel's  plan 
for  making  gambling  a  felony.  The  Legislature  took  the 
Controller's  view  of  the  situation,  and  over  the  Gov- 
ernor's veto  was  enacted  a  law  to  license  and  restrict 
gaming.  The  license  rate  for  each  game  was  as  follows  :l 

In  a  county  in  which  over  2,000  votes  were  cast,  $400 
a  quarter.  In  any  other  county,  $250  a  quarter.  Penal 
enforcement  sections  were  added,  and  since  the  adver- 
tising advantages  of  publicity  were  important,  the 
enforcement  appears  to  have  been  pretty  effective 
throughout  the  entire  history  of 'the  act.  One-half  of 
the  revenue  went  to  the  State  and  one-half  to  the  county 
in  which  it  was  collected. 

In  1871  the  rates  were  reduced  to  $100  a  month  for 
counties  having  over  1,500  votes,  and  $75  for  other 
counties,  and  in  1875  the  rate  was  increased  to  $400  a 
quarter  everywhere.  In  1877  this  rate  was  reduced  to 
$250  a  quarter  in  counties  having  less  than  500  voters. 
In  1879  a  flat  rate  for  all  counties  was  adopted — $100 

'Statutes  of  Nevada.  1869,  p.  120. 


150  TAXATION  IN  NEVADA 

per  game  for  the  first  month,  and  $75  for  each  succeed- 
ing month.  At  this  time  the  apportionment  was  also 
changed  so  that  the  State  received  only  one-fourth  and 
the  county  three-fourths  of  the  revenue. 

With  the  decay  of  the  early  mining  camps,  about  1880, 
gambling  was  greatly  reduced,  not  over  twenty  to  forty 
games  being  conducted  in  the  whole  State  for  twenty 
years.  In  1907,  after  the  recent  mining  revival,  the 
apportionment  was  changed  so  that,  except  for  slot 
machines,  all  of  the  revenue  went  to  the  town  or  city 
in  which  collected,  or  if  outside  of  a  town  or  city,  to  the 
county. 

The  Legislature  of  1909  enacted  a  law  prohibiting 
gambling  with  the  exception  of  two  minor  forms,  the 
law  taking  effect  October  1,  1910.  The  violation  of  the 
provisions  of  this  act  was  made  a  felony,  and  thus  the 
recommendation  of  Nevada's  first  Governor  was  given 
effect.  Since  that  date  very  little  revenue  has  been 
received  from  this  source. 

PRIZE-FIGHT  LICENSES 

An  act  of  1897  provides  for  the  licensing  of  prize 
fights,  the  license  to  be  issued  by  the  Sheriff  for  $1,000, 
and  the  revenue  to  be  divided,  one-tenth  going  to  the 
county  and  nine-tenths  to  the  State.  The  license  was  of 
little  importance  from  a  revenue  standpoint.  In  1913 
the  act  was  amended  limiting  the  fight  to  ten  rounds,  and 
reducing  the  license  to  $100. 

LICENSES  FOR  HORSE-RACING 

In  1915  the  Legislature  enacted  a  law  providing  for 
a  State  Racing  Commission  to  license  and  regulate  horse- 


LICENSE  AND  OTHER  BUSINESS  TAXES          151 

racing.1  The  State  receives  a  commission  amounting  to 
one  and  a  third  per  cent  of  the  money  bet  on  the  races 
under  the  "paris  mutuel"  system,  and  under  an  amend- 
ment of  1917  all  money  received  from  this  source  is 
devoted  to  the  improvement  and  maintenance  of  state 
highways. 

SHEEP  LICENSE  TAX 

In  the  earlier  period  of  the  development  of  the  sheep 
industry  there  was  comparatively  little  land  in  private 
ownership.  The  sheep  were  ranged  in  great  bands  over 
public  lands  free  of  rent  and  without  regulation.  The 
business  had  its  hazards  of  snow  and  cold  and  drought 
and  disease,  but  was,  on  the  whole,  very  profitable,  and 
the  competition  for  range  privileges  was  keen.  How 
the  sheepmen  fought  with  each  other  and  with  the  cattle- 
men for  access  to  the  pastures  is  a  matter  of  history. 
In  the  course  of  time  certain  far-sighted  men  began  to 
purchase  the  land  which  had  water,  and,  in  this  way, 
to  control  the  use  of  adjacent  ranges  of  vastly  greater 
area.  Two  classes  of  sheepmen  came  into  existence,  the 
landed  and  the  landless,  the  latter  being  known  as 
tramp  stockmen. 

The  situation  was  further  complicated  by  the  fact  that 
residents  of  neighboring  States  would  drive  their  sheep 
across  the  line  into  Nevada  and  compete  for  the  use  of 
ranges  already  overstocked.  This  contributed  to  the 
risk  of  stock  raising  and  increased  the  bitterness  of  the 
feud  between  rival  stockmen.  Moreover,  it  tended  to 
destroy  the  value  of  the  range,  for  plant  life  is  destroyed 
by  too  close  grazing. 

'Statutes  of  Nevada,  1915.  p.  23. 


152  TAXATION  IN  NEVADA 

The  landed  stockmen  gradually  divided  among  them- 
selves the  pasturage  privileges  of  the  ranges  controlled 
by  their  water  rights,  and  they  utilized  the  land  accord- 
ing to  a  pretty  well-defined  plan,  driving  the  sheep  to 
one  region  for  the  winter,  to  another  in  the  spring,  and 
so  on  through  the  year  so  as  to  make  the  best  use  of  the 
land,  and  so  that  they  were  more  sure  of  a  supply  of 
feed  at  every  season.  But  the  control  of  the  range 
through  the  ownership  of  the  water  was  far  from  per- 
fect, and  the  nonresident  and  the  tramp  stockmen  con- 
tinued to  run  their  flocks  on  the  preserves  of  their  landed 
rivals  in  a  most  exasperating  way.  The  permanent  inter- 
est of  the  industry  lay  with  the  landed  men,  for  they 
did,  in  some  small  measure,  conserve  the  range,  whereas 
the  tramp  stockman,  having  no  permanent  interest  in 
it,  was  more  inclined  to  ruin  a  range  for  the  sake  of  a 
temporary  advantage.  Moreover,  the  landed  men  were 
paying  tax,  not  only  on  their  sheep,  but  on  their  land, 
while  the  landless  men,  moving  their  herds  across  county 
lines  and  state  lines  and  owning  no  land  anywhere,  were 
sometimes  able  to  escape  taxes  altogether  and,  at  most, 
they  paid  on  the  stock  only. 

The  sheep  license  tax  was  in  part  an  effort  to  secure 
greater  revenue  from  nonresident  and  tramp  stockmen, 
but  also  it  was  intended  to  drive  them  out  of  busi- 
ness. In  this  latter  purpose  the  tax,  taken  in  connec- 
tion with  other  things,  has  had  some  measure  of  success, 
so  that  there  are  at  present  fewer  tramp  stockmen  in 
the  State,  and  sheep  growing  has  become  more  nearly 
a  peaceful  pursuit. 


LICENSE  AND  OTHER  BUSINESS  TAXES          153 

The  provisions  of  the  act  are  as  follows:1  Owners  of 
herds  of  sheep  are  required  to  obtain  a  license  for  which 
they  pay  an  amount  so  graduated  that  it  is  equal  to 
about  five  cents  a  year  for  each  sheep.  But  all  resident 
sheep  owners  who  own  land  at  the  rate  of  one  acre  to 
three  sheep  are  exempt  from  the  provisions  of  the  act. 
There  is  no  requirement  that  the  land  so  owned  shall  be 
used  in  pasturing  the  sheep  nor  that  it  shall  be  in  the 
same  county  in  which  sheep  are  grazed.  A  man  might 
devote  his  owned  land  to  cattle  growing  or  to  any  other 
purpose,  or  to  nothing  at  all,  and  secure  the  full  benefit 
in  the  way  of  exemption.  The  failure  to  procure  the 
license  in  advance  is  a  criminal  offense,  punishable  by 
fine  or  imprisonment.2 

In  1915  there  was  added  a  further  section  providing 
for  a  license  rate  of  fifteen  cents  a  head  for  sheep  owned 
by  landless3  nonresidents,  such  license  rate  to  be  paid  in 
each  county  in  which  the  sheep  are  pastured,  and  such 
rates  to  be  doubled  if  the  owner  reports  the  number  of 
sheep  below  the  actual  number.4 

The  Sheriff,  who  is  license  collector,  receives  a  commis- 
sion of  two  dollars  a  license  and  twenty  per  cent  of  all 
taxes  collected,  and,  since  the  rigorous  enforcement  of 
the  law  is  likely  to  meet  with  the  approval  of  the  local 
people  of  influence,  it  is  probable  that  the  commission 

'The  act  was  passed  in  1891  and  amended  in  1895,   1901,  and  1915. 

2In  1896  the  Supreme  Court  held,  in  the  case  of  State  v.Wheeler  (23  Nev. 
144),  that  a  lessee  of  land  for  a  fixed  term  was  an  owner  within  the  mean- 
ing of  this  act.  The  amendment  of  1901  excluded  this  interpretation. 

3Apparently  any  nonresident  sheepman  could  evade  this  special  fifteen- 
cent  rate  by  buying  any  small  piece  of  land,  no  matter  how  little  or  value- 
less it  might  be. 

'Statutes  of  Nevada,  1915,  pp.  240  and  353. 


154  V'.l. V.I  770V   IN  NEVADA 

tends  to  secure  efficient  enforcement,  especially  in  the 
case  of  the  nonresident  owner. 

There  might  be  a  constitutional  question  as  to  the 
exemption  of  land  owners.  The  owner  of  valuable  city 
property  would  not  be  exempt,  even  though  he  might  be 
a  permanent  resident  and  a  heavy  taxpayer.  The  owner 
of  ten  thousand  acres  of  the  poorest  land  would  be 
exempt  even  if  the  land  were  worthless,  or  used  for 
some  purpose  other  than  grazing.  The  law  does  not 
provide  for  any  regulation  except  such  as  may  result 
incidentally  from  the  imposition  of  the  license  tax.  It 
may  be  held,  however,  that  the  tendency  of  the  law  to 
concentrate  sheep  ownership  in  the  hands  of  resident 
owners  and  of  land  owners  will  conserve  a  public  interest. 

COUNTY  REVENUE  LICENSE  TAXES 
The  Northern  States  make  comparatively  little  use  of 
the  pure  revenue  license,  ordinary  forms  of  business 
being  exempt,  but  considerable  income  is  derived  from 
saloons  and  from  an  increasingly  large  number  of  busi- 
ness activities  which  require  inspection  and  regulation. 
In  the  Southern  States  greater  use  has  been  made  of  the 
purely  revenue  business  license.  The  Intermountain 
and  Pacific  West,  under  the  leadership  of  California, 
gave  the  business  license  an  important  place  in  its 
revenue  system,  particularly  in  its  early  history.  This 
arrangement  may  be  regarded  as  an  adjustment  to 
pioneer  mining  conditions.  Thriving  mining  camps  often 
grew  up  in  the  course  of  a  few  months,  and  when  this 
happened  in  a  region  previously  without  population  it 
became  necessary  to  create  certain  local  governmental 


LICENSE  AND  OTHER  BUSINESS  TAXES          155 

agencies,  and  the  demand  for  local  revenues  was  imme- 
diate, while  the  ordinary  property  tax  might  not  yield 
any  revenue  for  a  year  or  more.  Moreover,  in  the  early 
stage  of  the  development  of  a  mining  camp  the  hazard  of 
the  mining  risk  is  very  great,  and  it  attaches,  not  only 
to  the  mine,  but  to  all  other  property  in  the  camp.  The 
lively  camp  of  today  may  be  almost  or  quite  deserted 
next  year,  and  in  this  case  all  real  estate  values  vanish 
and  personal  property  is  removed.  Under  these  condi- 
tions the  general  business  license  for  local  revenues  is 
desirable  in  that  it  provides  an  immediate  revenue  and 
is  about  as  well  apportioned  as  any  tax  could  be  under 
the  circumstances. 

REVENUE  LICENSE  TAXES  FOR  COUNTY  PURPOSES 
The  first  Territorial  Legislature  of  Nevada  enacted 
a  revenue  law  embracing  a  system  of  license  taxes  for 
county  purposes,  the  act  being  in  large  measure  copied 
from  the  revenue  laws  of  California.1  The  rate  on  bank- 
ing and  on  the  business  of  brokers,  merchants,  and  keep- 
ers of  hotels,  lodging-houses,  and  saloons  was  graduated 
according  to  the  amount  of  business,  while  a  uniform 
rate  was  established  for  insurance  companies  and  on  the 
business  of  transporting  gold  dust  or  gold  and  silver 

'The  license  law  of  California  enacted  in  1850  was  amended  frequently  up 
to  1861,  the  general  aims  of  the  amendments  being  along  the  line  of  greater 
efficiency  in  administration,  and  better  graduations.  The  bill  for  the  act  of 
1861  (Statutes  of  California,  1861,  p.  441-447)  became  the  basis  of  the  first 
territorial  license  law  of  Nevada.  In  1879  the  constitution  of  California  was 
revised  so  that  the  Legislature  was  deprived  of  power  to  impose  taxes  for 
county  or  city  purposes.  After  that  date  the  question  of  local  licenses  for 
county  and  city  purposes  was  determined  by  the  local  county  and  city 
authorities  acting  under  general  permissive  laws.  In  1901  the  general  busi- 
ness or  revenue  license  was  abolished,  but  regulatory  licenses  may  be 
imposed  in  incorporated  cities  by  the  city  government  only  and,  outside  of 
cities,  by  the  county  authorities. 


156  TAXATION  IN  NEVADA 

bullion.  The  provisions  of  the  law  were  not  wholly  con- 
sistent with  the  distinction  between  the  revenue  and 
regulatory  licenses.  The  revenue  purpose  predominated, 
but  the  distinction  was  recognized  and  the  first  and  sec- 
ond State  Legislatures  modified  the  law  in  the  direction 
of  greater  consistency.  In  1865  saloon  and  hotel  licenses 
ceased  to  be  graduated,  and  were  put  on  a  flat-rate  basis, 
probably  for  administrative,  rather  than  regulatory, 
reasons,  but  in  1866  the  graduation  was  restored  for 
hotels.1  Administrative  features  were  improved,  but  left 
far  from  perfect.  In  the  following  years  a  few  changes 
of  minor  importance  were  made.  The  classifications  for 
purposes  of  the  graduated  rates  were  extended  in  the 
case  of  banks  and  brokers.  Other  minor  changes  occur- 
ring from  time  to  time  have  been  mainly  of  an  adminis- 
trative character. 

The  rates  imposed  by  the  law  as  it  stood  before  1915 
were  as  follows,  and  for  the  most  part  these  rates  had 
been  in  force  during  almost,  if  not  quite,  the  entire 
period  of  statehood : 

FOB  BANKS  AND  PRIVATE  BANKERS 

Amount  of  business  per  month  License  per  quarter 

Class  1— $500,000  or  more $600 

Class  2— $300,000  to  $500,000 450 

Class  3— $200,000  to  $300,000 300 

Class  4— $100,000  to  $200,000 225 

Class  5— $50,000  to  $100,000 150 

Class  6— $25,000  to  $50,000 -75 

Class  7— Less  than  $25,000 36 

'Statutes  of  Nevada,  1864-5,  p.  297  ;    Statutes  of  Nevada,  1866,  p.  173. 


LICENSE  AND  OTHER  BUSINESS  TAXES          157 
BBOKKKS  AND  SAVINGS  BANKS 

Amount  of  business  per  month  License  per  quarter 

Class  1— $250.000  or  more ,..  $100 

Class  2— $200,000  to  $250,000 80 

Class  3— $100,000  to  $200,000 50 

Class  4— $50,000  to  $100,000 30 

Class  5— Less  than  $50,000 20 

MERCHANTS 

Estimated  average  monthly  sales  License  per  quarter 

Class  1 — $100,000  or  more $150.00 

Class  2— $75,000  to  $100,000 112.50 

Class  3— $50,000  to  $75,000 75.00 

Class  4— $40,000  to  $50,000 60.00 

Class  5— $30,000  to  $40,000 45.00 

Class  6— $20.000  to  $30,000 30.00 

Class  7— $10,000  to  $20,000 22.50 

Class  8— $5,000  to  $10.000 15.00 

Class  9— $1,000  to  $5,000 11.25 

Class  10 — Less  thau  $1,000 7.50 

HOTELS  AND  LODGING-HOUSES 

Amount  of  business  per  month  License  per  quarter 

Class  1 — $3,000  or  more $45,00 

Class  2— $1,000  to  $3,000 14.00 

Class  3— $30  to  $1,000 7.50 

In  addition  to  the  fact  that  the  provisions  of  the  license 
laws  relating  to  bankers  and  brokers  were  contrary  to 
national  laws  so  far  as  they  related  to  national  banks, 
they  were  seriously  defective  in  several  ways : 

1.  The  terms  "bankers"  and  "brokers"  were  defined  in 
almost  identical  terms  so  that  it  was  impossible  to  dis- 
tinguish between  them,  although  there  were  two  different 
rates  of  license  based  on  two  different  classifications. 
"Bankers"  includes  "persons  or  associations  engaged  in 
loaning  money  at  interest,"  or  in  "buying  or  selling 
notes,  bonds,  or  other  evidences  of  indebtedness,"  or 
engaged  in  "  buying  or  selling  gold  dust  and  silver  bullion, 


158  TAXATION  IN  NEVA1>.\ 

gold  or  silver  coin,  or  engaged  as  keepers  of  savings 
banks."  "Brokers"  includes  all  of  those  classes  of  per- 
sons and  associations  by  specific  mention.1  By  definition 
every  broker  was  a  banker  and  every  banker  was  a 
broker. 

2.  The  tax  on  banks  was  graduated  according  to  the 
amount  of  business  done,  the  rate  for  banks  varying  from 
$36  to  $600  a  quarter,  but  the  method  of  measuring  the 
business  was  not  prescribed.  What  was  to  be  counted 
in  determining  the  business  of  a  bank — its  new  deposits, 
its  total  deposits  account,  its  new  loans,  its  loans  out- 
standing, its  collections,  its  purchases  and  sales  of  securi- 
ties, drafts  and  money  orders  sold,  etc.,  or  all  of  these? 
The  logic  of  the  language  would  clearly  imply  that  every 
transaction  carried  on  by  a  bank,  with  the  exception  of 
the  receiving  of  deposits  in  the  form  of  paper  money  and 
of  checks  drawn  within  the  State,  should  be  counted. 
Moreover,  some  support  for  this  interpretation  is  found 
in  the  rates  and  classifications.  There  were  but  five 
classes  in  the  original  act,  and  unless  some  such  method 
of  measurement  were  used,  all  of  the  banks  would  come 
in  the  lowest  class,  thus  abolishing  the  classification  alto- 
gether. The  more  recent  list  of  seven  classes  permitted 
every  bank  in  the  State,  using  some  method  of  measuring 
business,  to  be  classified  in  one  of  the  two  lower  classes. 

On  the  other  hand,  there  is  some  evidence  in  the  history 
of  bank  licenses  in  California  which  tends  to  show  that 
the  amount  of  business  was  intended  to  be  measured 
merely  by  the  exchange  sold.  The  California  law  of 
1861,  the  bill  for  which  appears  to  have  served  as  a  basis 
for  the  law  enacted  by  the  first  Territorial  Legislature  of 
Nevada,  contains  an  exactly  similar  ambiguity  in  almost 
identical  language.2  But  the  previous  law  of  California 
had  graduated  the  tax  in  proportion  to  the  amount  of 
bills  of  exchange  drawn,3  and  it  is  probable  that  the  term 

'Revised  Laws  of  Nevada,  1912,  p.  1091. 

^Statutes  of  California,  1861,  p.  443. 

3Wood's  Digest  of  California  Laws,  1858,  p.  628. 


LICENSE  AND  OTHER  HLS1NE88  TAXKK          159 

"amount  of  business"  of  the  act  of  1861  had  been  used  by 
the  careless  man  who  drafted  the  bill  to  mean  the  same 
thing.  Of  course  such  an  interpretation  is  entirely  incon- 
sistent with  the  language  of  the  act,  but  it  frequently 
happens  that  legislators  fail  to  express  their  purpose 
accurately.1 

What  has  been  said  relative  to  the  measurement  of  a 
bank's  business  applies,  in  the  main,  to  brokers,  except 
that  the  history  of  California  legislation  throws  no  light 
on  the  question.  In  general,  the  rates  were  much  lower 
relative  to  the  amount  of  business,  and  this  may  be  taken 
to  indicate  that  the  business  of  a  broker  was  intended  to 
be  measured  by  a  more  inclusive  method. 

A  serious  defect  of  the  law  in  the  case  of  both  brokers 
and  bankers,  is  that,  through  the  very  low  classification 
taken,  even  by  the  largest  banks,  there  was  a  discrimina- 
tion against  the  small  bank.  A  bank  with  a  capital  of 
$10,000  and  with  a  business  proportionately  small,  paid 
about  one-half  as  much  license  tax  as  a  bank  with  capital 
and  business  fifty  times  as  large. 

The  provisions  of  the  law  relating  to  merchants' 
licenses  were  more  carefully  drawn.  The  definitions 
were  adequate,  and  the  measurement  of  business  by  sales 
is  clear,  and  the  rates  were  graduated  pretty  fairly, 
except  that  they  discriminate  somewhat  against  the 
smaller  merchants.  This  discrimination  was  more  serious 
in  the  actual  administration  of  the  law,  since  it  had  been 

'This  custom  of  copying  laws  from  the  statute  books  of  California  in  an 
uncritical  way  is  to  be  condemned.  In  many  cases  the  legislation  of  that 
State  has  been  bungled,  and  Nevada  has  copied  the  imperfections  along  with 
the  rest,  and  it  is  not  to  the  credit  of  the  State  that  it  has  retained  these 
defects  long  after  they  have  been  discovered  and  removed  by  the  State  from 
which  they  were  copied.  In  other  cases  good  laws  of  other  States-  have  been 
placed  upon  the  statute  books  without  sufficient  study  to  determine  whether 
they  were  applicable  to  the  political  organization  or  to  the  economic  con- 
ditions of  Nevada. 


160  T.\XATIOX  IN  NEVADA 

an  almost  universal  custom  to  permit  the  underclassifi- 
cation  of  large  business  enterprises  so  that  a  little  store 
with  a  stock  worth  a  thousand  dollars  has  paid  more 
than  half  as  high  a  license  as  a  store  with  a  stock  worth 
more  than  a  hundred  thousand  dollars.  In  fact,  the 
merchants'  licenses,  as  well  as  all  of  the  other  graduated 
licenses,  have  become,  through  custom,  almost  flat-rate 
licenses,  and  these  always  work  to  the  disadvantage  of 
the  small  enterprise.  Moreover,  it  would  be  impossible 
to  enforce  the  provisions  of  our  law  fairly  without  con- 
ferring great  inquisitory  power  upon  our  administrative 
officers,  and  public  sentiment  in  America  does  not  favor 
the  exercise  of  such  power  except  in  the  case  of  quasi- 
public  corporations,  or  where  some  highly  important  and 
obvious  public  interest  requires  it. 

The  classification  and  graduation  of  hotel  licenses  was 
obviously  defective  in  the  law  itself,  and  what  is  said 
relative  to  the  administration  of  merchants'  licenses 
applies  to  hotels.  In  practise  a  hotel  whose  receipts  were 
over  eight  thousand  dollars  a  month  was  required  to  pay 
the  same  rate  as  that  imposed  upon  a  lodging-house  of 
four  or  five  rooms,  with  receipts  amounting  to  thirty 
dollars  a  month. 

The  action  of  the  Legislature  of  1915  in  abolishing 
these  license  taxes  was  eminently  wise.1  The  State  had 
long  passed  the  pioneer  conditions  which  justified  them 
in  the  beginning.  The  provisions  of  the  law  were  not 
well  devised,  either  from  the  standpoint  of  equality  and 
justice,  or  from  that  of  administration.  The  adminis- 
tration of  the  law  was  expensive  and  inefficient,  and  it 

'Statutes  of  Nevada.  1915.  p.  247-8. 


LICENSE  AND  OTHKR  HUSINES8  TAXES          \§\ 

could  not  have  been  made  efficient  without  the  use  of 
inquisitorial  power,  which,  under  the  circumstances, 
would  not  be  justifiable.  Moreover,  such  taxes  may  be 
shifted  to  the  consumer  in  the  form  of  higher  prices. 
Indirectly  this  works  to  the  disadvantage  of  the  local 
business  community  because  the  advance  in  prices  due  to 
the  tax — if  it  is  large  enough  to  amount  to  anything — 
tends  to  drive  business  away.  Witness  the  large  mail- 
order business  with  firms  in  other  States.  It  is  good 
public  policy  to  remove  all  handicaps  on  business  enter- 
prises. Give  the  home  merchants  an  even  chance  to  meet 
outside  competition,  and  the  community  will  receive  a 
more  than  proportionate  benefit  in  the  form  of  lower 
prices  and  better  service. 

REVENUE  LICENSE  TAXES  FOR  CITY  AND  VILLAGE 
PURPOSES 

The  cities  and  villages  of  Nevada  are  of  two  classes, 
incorporated  and  unincorporated.  The  incorporated 
cities  are  governed  by  their  own  officers  in  accordance 
with  the  provisions  of  the  general  charter  act  or  of  special 
charters.1  The  unincorporated  cities  and  villages  are 
governed  by  the  Boards  of  County  Commissioners,  which 
bodies  have  power  to  levy  municipal  taxes  and  to  collect 
license  taxes  for  municipal  purposes  in  addition  to  county 
taxes.2 

In  the  general  charter  act,  in  all  the  special  city  charters, 
and  in  the  act  providing  for  the  government  of  unincor- 
porated towns  and  cities,  wide  licensing  powers  are  con- 

'Statutes  of  Nevada,  1907,  p.  241,  and  1905,  p.  99. 
^Statutes  of  Nevada,  1881  p.  68. 


162  TAXATION  IN  NEVADA 

ferred.  The  general  act  for  the  incorporation  of  cities 
and  towns  contains  more  than  a  page  devoted  to  the 
specific  mention  of  occupations  subject  to  a  license  tax, 
and  there  is  a  blanket  clause  including  "all  character 
of  lawful  trades,  callings,  industries,  occupations,  pro- 
fessions, and  business  conducted  in  whole  or  in  part 
within  the  city."  The  special  city  charters,  and  likewise 
the  act  for  the  government  of  unincorporated  places,  all 
have  similar  provisions.  The  city  councils  of  incorpo- 
rated places  are  left  free  to  graduate  such  licenses  as 
they  may  choose,  and  to  make  the  rates  uniform  in  other 
cases,  and  thus  to  distinguish  between  revenue  and  regu- 
latory licenses,  but  in  the  unincorporated  towns  and 
cities  all  rates  must  be  fixed  with  "due  regard  to  the 
amount  of  business  done  by  each  firm,  company,  or  per- 
son so  licensed."  In  these  planes  all  licenses  seem  to  be 
regarded  primarily  as  revenue  licenses,  although  the 
power  to  regulate  is  conferred. 

Under  the  provisions  of  these  various  laws  the  local 
municipal  governing  bodies  have  imposed  rates  suffi- 
ciently high  to  yield  an  important  part  in  the  city  rev- 
enues. As  a  rule  the  classifications  and  graduations  are 
better  devised  than  those  of  the  county  licenses ;  the  tax 
is  applied  to  about  every  line  of  business,  and  the  admin- 
istration is  better  than  in  the  case  of  the  county  licenses.1 

Apparently  revenue  licenses  are  better  administered 
when  the  rates  and  administration  are  under  the  con- 
trol of  the  local  officials  and  when  the  revenues  belong 
to  the  immediate  local  community.  Most  of  the  argu- 

'For  example,  in  1912,  a  certain  business  was  subject  to  forty-five  dol- 
lars city  license  in  Reno,  and  to  the  same  amount  of  county  license  under  state 
law.  The  city  collected  $45  and  the  county  only  $7.50. 


LICENSE  AND  OTHER  BUSINESS  TAXES          163 

merits  against  the  county  revenue  license  apply  to  the 
city  revenue  license,  and  it  would  be  good  public  policy 
to  abolish  all  license  taxes  which  do  not  aim  at  regulation 
or  restriction. 

STATE  BUSINESS  TAXES 

In  addition  to  county  and  city  licenses,  Nevada  has 
made  considerable  use  of  various  license  and  other  busi- 
ness taxes  for  state  purposes  during  its  entire  history. 
The  first  Legislature  provided  for  a  stamp  tax,1  a  fran- 
chise tax  on  toll  roads,2  a  tax  on  the  transportation  of 
passengers  from  the  State,3  and  a  tax  on  insurance,4  for 
the  benefit  of  the  state  treasury. 

THE  STAMP  TAX 

The  stamp  tax  applied  pretty  generally  to  all  orders, 
drafts,  promissory  notes,  deeds,  contracts,  wills,  and 
other  legal  instruments,  and  among  the  administrative 
provisions  were  a  penal  clause  and  a  clause  making  all 
unstamped  documents  void.  This  latter  provision 
resulted  in  a  considerable  use  of  stamps,  but  in  1868  the 
Controller  estimated  that  the  revenue  could  be  increased 
by  about  one-third  if  he  were  given  better  means  of 
enforcement.  Apparently  the  law  was  so  largely  vio- 
lated by  1871  that  the  violators  were  able  to  influence 
the  Legislature  to  amend  the  law  in  such  a  way  as  to 
make  its  violation  safer.  Provision  was  made  at  this 
time  whereby  a  document  lacking  the  stamp  could  be 
made  valid  at  law  by  affixing  the  stamp  at  any  later  date. 

'Statutes  of  Nevada,  1864-5,  p.  315. 
^Statutes  of  Nevada,  1864-5,  p.  255. 
"Statutes  of  Nevada,  1864-5.  p.  304. 
Statutes  of  Nevada,  1864-5,  p.  105-7. 


164  TAXATION  IN  NEVADA 

The  amendment  could  have  properly  been  entitled  "An 
act  to  make  the  evasion  of  the  law  easy  and  safe."  The 
decrease  of  revenues  in  the  succeeding  years  indicates 
that  the  amendment  was  effective.  In  1873  the  law  was 
repealed. 

TAX  ON  TOLL  ROADS 

The  franchise  tax  on  toll  roads  amounting  to  two  per 
cent  of  the  gross  proceeds  was  collected  until  1900,  but  in 
constantly  diminishing  amounts,  due  to  the  substitution 
of  public  highways  for  toll  roads.  The  amount  collected 
for  1865  was  $4,124.87,  and  for  1900,  $20.05. 

THE  PASSENGER  TAX 

The  passenger  tax  amounting  to  one  dollar  for  each 
passenger  carried  from  the  State  by  any  stage  coach  or 
any  transportation  agency  was  collected  from  the  carrier. 
Apparently  the  administrative  provisions  were,  at  first, 
weak.  Less  than  three  hundred  dollars  was  collected  the 
first  year,  but  after  certain  amendments  were  enacted  in 
1866,  the  returns  amounted  to  about  seven  thousand  dol- 
lars a  year.  The  law  was  upheld  in  1865  by  the  Nevada 
"Supreme  Court,1  but  on  appeal  it  was,  in  1867,  declared 
void  by  the  United  States  Supreme  Court  on  the  ground 
that  it  trespassed  on  the  power  of  the  Federal  Govern- 
ment to  regulate  interstate  commerce.2 

INSURANCE  LICENSE  TAXES 

The  insurance  tax  of  1865  embraced  three  separate 
payments  as  follows:  (1)  A  fee  of  five  dollars  to  the 
State  Controller  for  a  certificate  for  each  company;  (2) 

'1  Nev.  294.  26  Wall.  35. 


LICENSE  AND  OTHEIt  BVfilXESfi  TAXES          165 

a  license  tax  of  $25  a  quarter  for  each  agent;  (3)  a  tax 
of  two  per  cent  on  the  premiums  collected  in  the  case  of 
fire  insurance,  and  of  one  per  cent  for  life  insurance  com- 
panies. The  revenue  collected  for  the  first  three  years 
was  insignificant,  but  without  further  legislation  the  col- 
lections increased  notably  in  1868-9,  due  probably  to  the 
greater  activity  of  the  administrative  officers. 

The  provisions  of  the  insurance  act  have  been  amended 
frequently,  but  the  only  important  changes  in  the  reve- 
nue provisions  were  made  in  1881,  when  accident  and 
casualty  insurance  companies  were  included  within  its 
provisions,  and  when  a  flat  rate  of  $100  a  year  for  each 
company  wras  substituted  for  the  graduated  rate  of  two 
per  cent,  or  one  per  cent  of  the  premiums,  and  the  quar- 
terly rates  for  agent's  licenses  was  reduced  to  fifteen 
dollars.  Under  this  revised  law  the  State  has  received  in 
recent  years  about  ten  or  eleven  thousand  dollars  annu- 
ally. The  desirability  of  such  a  tax  may  be  questioned, 
since  insurance  should  be  encouraged.  A  small  fee  to 
cover  cost  of  supervision  would  be  appropriate. 

THE  DRUMMER  LICENSE 

In  1883  a  law  was  enacted  providing  for  the  taxation 
of  drummers  by  means  of  licenses,  the  rates  of  which 
varied  from  $100  to  $200  per  annum  for  drummers  not 
having  a  place  of  business  within  the  State,  and  with 
rates  about  one-half  as  high  for  those  who  represented 
Nevada  firms.  The  revenue  from  this  source  amounted 
to  ten  or  twelve  thousand  dollars  a  year  for  a  few  years, 
but  in  1887  the  law  was  declared  unconstitutional,1  since 

'19  Nev.  439. 


166  TAX.ITI().\   l\  A/;  1. 1 //I 

it  constituted  a  discrimination  against  interstate  com- 
merce. 

CORPORATION  TAXES 

In  1903  the  Legislature  enacted  a  general  incorpora- 
tion act  and  provided  for  certain  taxes  paid  in  the  form 
of  fees,1  some  graduated  and  some  uniform,  to  the  Sec- 
retary of  State.  The  fees  apply  to  corporations  organized 
under  the  laws  of  Nevada  and,  in  part,  to  foreign  cor- 
porations doing  business  in  this  State.2  In  1905  the  rates 
were  reduced  somewhat,  but  on  account  of  the  great 
increase  of  corporate  activity  the  revenues  increased 
rapidly.3  In  1907  the  fees  were  applied  fully  to  foreign 
corporations,  with  a  resultant  further  increase  in  the 
revenues.4  Since  1908  the  receipts  from  this  source  have 
diminished  very  greatly,  due  to  the  decrease  of  mining 
promotion  and  speculation,  and  to  the  effect  of  the  tax 
in  discouraging  high  capitalization.5 

STATE  LIQUOR  LICENSE 

The  state  liquor  license  enacted  in  1905  provided  for 
an  annual  state  license  at  the  rate  of  $50  for  retailers, 

'Fees,  properly  so  called,  are  payments  for  special  services  rendered  to 
individuals  or  corporations,  and  the  charge  does  not  exceed  the  cost  of  ren- 
dering the  service.  Where  a  so-called  fee  is  greatly  in  excess  of  the  cost 
of  the  service  such  excess  is  not  a  fee,  but  a  tax. 

'Statutes  of  Nevada,  1903,  p.   158. 

"Statutes  of  Nevada,  1905,  p.  76. 

"Statutes  of  Nevada,  1907,  p.  190. 

5Previous  to  1903  the  Secretary  of  State  collected  certain  fees  which  for 
the  year  1902  amounted  to  $2,346.49.  The  increase  in  fees  after  1902  is  due 
chiefly  to  the  corporation  tax,  although  the  older  fees  probably  increased  to 
the  extent  of  five  or  six  thousand  dollars  a  year.  The  total  collections  of  the 
office  of  Secretary  of  State  for  the  fourteen  years,  beginning  with  1902,  were 
as  follows : 

1902—  $2,346.49     1906— $64,975.90     1910— $39,825.45     1913— $29,946.95 

1903— $14,408.65     1907— $92,784.20     1911— $35,937.75     -1914— $17,775.65 

1904— $14,748.50     1908—106,826.10     1912— $29,908.65     1915— $27,846.00 

1905— $28,478.60     1909— $44,038.55 


LICENSE  AND  OTHER  Bl'filXESN  TAXES          167 

$100  for  wholesale  dealers,  and  $12  for  druggists.1  An 
amendment  in  1913  increased  the  rates  to  $100  for  retail- 
ers, $150  for  wholesale  dealers,  and  $25  for  druggists.2 
The  income  from  this  source  has  been  large,  amounting 
to  an  average  of  over  fifty  thousand  dollars  a  year  for 
the  seven  years  before  the  adoption  of  the  amendment  of 
1913.  The  income  for  1916  was  $80,293. 

BUILDING  AND  LOAN  ASSOCIATION  LICENSE 
By  an  act  of  1905  foreign  building  and  loan  associa- 
tions are  required  to  pay  a  state  license  tax  of  $100  a 
year.    This  tax  produces  but  little  revenue. 

STATE  BANK  LICENSE 

A  special  state  license  is  collected  from  all  banks  except 
national  banks,  the  rate  being  graduated  from  $100  for 
banks  capitalized  at  $25,000  or  less  to  $275  for  banks 
with  $300,000  or  more  capital  stock.  The  license  provi- 
sion is  part  of  an  act  providing  for  the  examination  of 
banks,  and  it  was  intended,  doubtless,  that  the  special 
revenue  would  be  approximately  equal  to  the  cost  of 
administering  the  act,  but,  on  account  of  the  marked 
decrease  in  the  number  of  state  banks  in  1907-8,  the 
income  has  not  met  this  requirement. 

THE  STATE  LICENSE  ON  AUTOMOBILES 
A  state  license  tax  was  imposed  on  automobiles  in  1913 
and  the  act  was  amended  in  certain  details  in  1915  and 
1917.      The    rates    are    graduated    according    to    horse- 

'Statutes  of  Nevada.  1905,  p.  228. 
^Statutes  of  Nevada,  1913,  p.  423. 


168  TAXATlOy  IN  NEVADA 

power  into  three  classes,  and  the  revenue  from  this 
source  is  devoted  to  construction  and  maintenance  of 
roads. 

In  addition  to  the  revenues  derived  from  the  above- 
mentioned  sources,  the  State  secures  a  share  of  the 
income  produced  by  certain  county  regulatory  licenses 
as  follows:  (1)  Nine-tenths  of  glove-contest  licenses;  (2) 
one-fourth  of  amusement-hall  licenses;  (3)  one-half  of 
gaming  licenses.  But  since  1910  all  of  these  have  been 
negligible  from  a  revenue  standpoint. 

It  is  a  striking  fact  that  all  of  the  early  state  license 
and  other  excise  taxes,  with  the  exception  of  that  on 
insurance,  have  been  abandoned,  two  for  reasons  of 
unconstitutionality,  and  the  others  as  a  matter  of  policy. 
The  present  business  taxes  are,  with  the  exception  of 
that  on  insurance,  of  recent  date.1  The  State  in  1916 
derived  from  all  of  these  sources,  but  chiefly  from  the 
corporation  tax  and  from  liquor  licenses,  about  one 
hundred  and  thirty  thousand  dollars,  or  thirteen  per  cent 
of  all  revenue  from  taxation. 

On  the  whole,  the  state  excise  taxes  are  much  more 
nearly  free  from  objectionable  features  than  were  those 
of  the  county,  and  they  are  more  easily  and  efficiently 
collected. 

'The  old  state  excise  list  included  the  insurance  tax,  the  passenger  tax, 
the  toll-road  tax,  the  tax  on  gambling,  and  the  drummer  tax.  The  new 
list  embraces  insurance,  liquor  selling,  glove  contests,  the  grazing  of  sheep, 
and  banking. 


CHAPTER  VIII 
PUBLIC  EXPENDITURES 

The  subject  of  taxation  cannot  be  considered  wholly 
apart  from  that  of  public  expenditures.  Like  all  other 
States,  Nevada  has  witnessed  a  marked  increase  in 
expenditures  in  recent  years,  and  it  is  clear  that  as  the 
total  revenues  from  taxation  become  larger,  the  justice 
of  their  apportionment  is  a  question  of  growing  impor- 
tance. Moreover,  the  per  capita  public  expenditures  of 
Nevada  are  higher  than  in  any  other  Commonwealth,  and 
this  contributes  to  the  importance  of  all  the  questions 
relating  to  taxation. 

Public  expenditures  are  directly  related  to  the  enlarge- 
ment of  governmental  functions.  The  greater  the  number 
of  things  the  people  wish  to  have  done  by  governmen- 
tal agencies,  and  the  higher  the  standards  of  efficiency  in 
governmental  service,  the  greater  the  cost.  During  the 
period  of  the  early  mining  development,  1860-1880,  the 
governmental  functions  were  limited  to  those  most  essen- 
tial to  the  existence  of  the  State.  There  was  no  univer- 
sity, no  hospital  for  the  insane,  no  provision  for  the  care 
of  juvenile  delinquents,  little  or  no  public  expenditure 
for  health,  and  most  highways  were  maintained  as  toll- 
roads  by  private  individuals.  There  was  no  public  over- 
sight of  mining  or  other  industry  in  the  interest  of  safety. 
Previous  to  1880  the  state  expenses  amounted  to  three  or 
four  hundred  thousand  dollars  a  year. 

During  the  next  period  of  approximately  two  decades, 
the  revenues  of  the  State  suffered  a  diminution  due  to 


170  7M.V.I770.V   7.V  \KVADA 

decline  of  the  mining  industry,  and  the  general  tendency 
was  to  reduce  public  expenditures  to  a  minimum.  Sal- 
aries of  officers  were  reduced,  and  certain  offices  were 
abolished.  The  State  was  able  to  reduce  the  cost  of  main- 
tenance for  the  prison  and  the  expenditures  for  the  care 
of  the  insane,  and  of  other  unfortunates  because,  with 
the  decline  of  mining,  large  numbers  of  people  left  the 
State,  and,  among  those  who  left,  were  many  of  the  home- 
less migratory  men  who  furnish  so  large  a  proportion  of 
the  inmates  of  penal  and  charitable  institutions.  To  a 
very  limited  extent  this  period  witnessed  an  advance  in 
governmental  activities.  The  State  University  was  estab- 
lished at  Eeno  in  1886,  but  this  involved  small  demand 
upon  the  state  revenues,  since  the  support  came  chiefly 
from  the  National  Government.  The  State  began  to  care 
for  its  insane  in  1882,  whereas  previously  it  had  paid  for 
their  care  in  a  private  institution  in  California.  A  new 
Orphans'  Home  was  built.  But,  all  in  all,  the  state 
expenditures  for  this  period  was  not  increased,  and 
there  was  no  important  advance  in  governmental  func- 
tion calling  for  increased  taxation  except  that  some  of 
the  early  toll-roads  were  taken  over  by  the  public  and 
maintained  at  county  expense. 

Beginning  with  the  early  years  of  the  last  decade,  the 
State  experienced  a  marked  economic  development. 
Population  increased  rapidly,  new  railroads  were  built, 
and  values  of  land  and  other  classes  of  property  increased 
so  that  it  was  possible  for  the  State  to  increase  its 
revenues  without  resort  to  oppressive  taxes.  The  long- 
delayed  progress  in  the  development  of  governmental 
function  was  now  possible,  and  the  recent  period,  1902- 


I'l  RUG  EXPENDITURES  171 

1917,  has  witnessed  a  steady  movement  in  this  direction. 
New  offices,  including  a  Bank  Examiner,  a  State  Engi- 
neer, an  Inspector  of  Mines,  and  a  State  Auditor,  were 
created.  A  State  Police  has  been  provided  for.  Several 
commissions  have  come  into  existence,  and  the  work  of 
offices  formerly  in  existence  has  been  increased  in  a 
marked  degree.  The  University  is  now  supported  with 
much  greater  liberality.  The  following  table  shows  the 
growth  of  new  forms  of  public  service  as  indicated  by 
the  date  of  the  creation  of  new  offices  and  commissions: 

1901 — State  Board  of  Irrigation. 

1903 — State  Engineer. 

1905 — State  License  and  Bullion  Tax  Inspector. 

1907 — Sheep  Commission. 

1907 — Bank  Examiner. 

1907 — Railroad  Commission. 

1907 — System  of  School  Supervision. 

1908— State  Police. 

1909 — State  Hygienic  Laboratory. 

1909 — Pure  Food  Inspection. 

1911 — Public  Service  Commission. 

1913 — Tax  Commission. 

1915 — Livestock  Commission. 

1915 — Industrial  Insurance  Commission. 

1917— State  Auditor. 

1917 — State  Assayer  and  Inspector. 

1917 — Department  of  Highways. 

The  following  table  shows  the  increase  of  state  expendi- 
tures from  1902  to  1916.  The  classifications  used  by  the 
State  Controller  for  1916  are  used,  and  the  expenditures 
of  1902  are,  so  far  as  possible  and  with  slight  exception, 


172 


TAXATION 


A'/JIM/M 


classed  under  the  same  heads.  It  will  be  noticed  that 
many  new  sorts  of  service  have  appeared  since  1902,  and 
that  there  are  important  increases  of  expenditure  for 
most  of  the  old  offices : 

Per  cent 

Education —                                                   1902  1916       increase 

Public  Schools $131.085  $264,383         100 

University 35,207  163.607        364 

Virginia  City  School  of  Mines 2,798 

Touopah  School  of  Mines 3,015         

Historical  Society 3.368 

Teachers'  pensions 2,688        

Total .'. $166,892  $439,862         160 

Charitable  and  Penal  Institutions,  etc. — 

Orphans'  Home $17,344  $15,956          *8 

Hospital  for  Insane 41,506  57,407          38 

Prison 29,534  73,509         148 

Crittenton  Home 2,400 

School  of  Industry 11,362 

Prison  Farm 6.645         

Care  of  blind  and  deaf 2.749        

Total $91,133  $167.282          83 

Commissions  and  Boards — 

Fish  Commission $4,196 

Industrial  Commission 2,779         

Public  Service  Commission 5.064         

Railroad  Commission 18.893 

Tax  Commission 12.778         

Commission  on  Uniform  Laws 106         

Board  of  Health $215  2,556 

Total $215  $46,376 

Depart  men  is — 

Bank  Examiner .. $6,283 

State  Engineer  (Water  Measures)..     $2.094  26.466 

Inspector  of  Mines 3.952         

Printing  Office .4.289  22.127 

State  Library 3.052  4.825 

State  Police....  8.492 


Total „ $9.435 

•Decrease. 


$72.148 


I'f 


KM'KNDITUltES 


173 


Per  cent 

Agricultural  Farms  and  Fairs —  1902  isie     increase 

Clark  County  Experiment  Farm $5.760        

Agricultural  Society 5.318 

District  Fair $105        

Total $105  $11.084 

Salaries — 

Judicial  elective  officers $13,312  $21.000          57 

Assistants  to  judicial  officers 1,100  4.800        330 

Other  elective  officers 21,400  40.720          90 

Assistants  to  other  elective  officers....       8,150  32,153        294 

Total $43,902  $98.073         124 

tiumlry  Departmental  Expenses — 

Maintenance  Governor's  Mansion $984         

Governor's  traveling  expenses 542        

Governor's  Conference 150        

Adjutant-General's  expense 1.998        

Insurance  Commision  expense 139         

Surveyor-General  clerk  hire $1.033  2,166 

Supreme  Court  Bailiff 820 

Total $1,033  $0.799 

H u miry  Expenses  Common  to  All  Departments — 

Telephone,  telegraph,  postage $3,455        

Freight,  express,  drayage 1.259        

Exchange 950         

Miscellaneous  expenses 950         

Current  expenses $1,283       

Office  supplies,  etc 1,473         

Fuel,  light,  laundry 2,391 

Stationery,  fuel,  light 1,496       

Fire  insurance _ 426  94         

Industrial  insurance 1.985         

Advertising 650  2.825 

Repairs 601  1.824 

Reservoir,  water,  etc 627  1,043        

Automobile  road 1,210        

Gardeners,  janitors,  etc 3,000  8,104 

Elections 389  532 

Auditing  accounts 3.659         

Total $8.462  $31.886        276 

Interest  on  bonds....                             ..    $29.012  $51.000 


174  T  \. \.\TIO\  i\  \KVAI»A 

Per  cent 

MixecllanctHlif —                                            J902  1916       increase 

District  Judges'  traveling  expenses..      $1.321  $~».013         

Relief  of  Boweu li>o 

Silver  service  for  battleship 4.990         

Other  miscellaneous....  2,300 


Total $3,027  $10,720 

Extraordinary  Expenses — 

Panama-Pacific  Exposition $4.088 

Panama-California  Exposition 73r> 

Automobile  Road  Fund 17,713 


Total $23,117 

Total  Expenses  State  Government1..  $353,878        $960,947 

The  growth  of  population  in  this  period  of  fourteen 
years — Indians  not  counted — was  approximately  one 
hundred  per  cent.  The  per  capita  expenditures  increased 
by  about  thirty-five  per  cent,  a  lower  rate  of  increase 
than  in  most  States.2  During  this  same  period  there  has 
been  a  pretty  steady  increase  of  commodity  prices  and 
wages  due  to  the  depreciation  in  the  value  of  gold,  and 
this  increase  in  general  commodity  prices,  not  counting 
the  abnormally  rapid  increase  in  1916-17  due  to  the  war 
and  crop  conditions,  was  almost  exactly  at  the  same  rate 
as  the  increase  in  per  capita  cost  of  the  State  Government. 
In  other  words  the  per  capita  real  cost  of  the  State  Gov- 
ernment was  the  same  in  1916  as  it  was  in  1902,  the 
increase  in  the  number  of  dollars  being  offset  by  the 
decrease  in  the  value  of  the  dollar. 

Because  of  the  sparseness  of  population  in  Nevada  the 

1The  writer  has  not  made  a  study  of  county  expenditures  generally  in 
Nevada,  but  there  are  reasons  for  believing  that  county  and  other  local 
expenditures  have  increased  fully  as  rapidly  as  have  those  of  the  State. 

^During  the  ten-year  period  1903-13  the  total  per  capita  governmental 
cost  payments  of  all  state  governments  increased  by  71  per  cent,  while 
those  of  Nevada  increased  only  by  61  per  cent.  See  Census  Report  on 
Wealth,  Debt,  and  Taxation  for  1913. 


I'fHLIC  EXPENDITURES  175 

per  capita  cost  of  government  is  unusually  high — higher 
than  in  any  other  State.  A  population  always  less  than 
a  hundred  thousand  and  at  times  less  than  forty  thou- 
sand, excluding  Indians,  has  supported  all  the  machinery 
of  state  and  local  government.  The  per  capita  cost  of 
government  for  Nevada  as  given  in  the  Census  Report 
on  Wealth,  Debt,  and  Taxation  for  1913  was,  for  the 
State,  $10.45,  and  for  all  counties,  $17.18.  The  per  capita 
cost  for  all  States  was,  for  state  governments,  $3.95,  and 
for  counties,  $4.49.  This  represents  a  total  per  capita 
cost  of  state  and  county  government  in  Nevada  of  $27.63, 
as  compared  with  $8.44  for  the  country  as  a  whole.  This 
comparison  is  not  quite  just,  since  there  are  certain  func- 
tions performed  by  the  State  or  by  the  county  in  Nevada 
that  are  performed  by  smaller  political  divisions  in  many 
other  States.  For  example,  nearly  all  school  expendi- 
tures in  Nevada  are  made  by  the  State  or  by  counties, 
while  similar  expenditures  in  many  other  States  are  met 
by  local  school  district  or  township  taxes,  and  such 
expenditures  are  not  included  in  the  Report  on  Wealth, 
Debt,  and  Taxation.  The  same  is  true  in  relation  to 
expenditures  for  road  maintenance  and  in  a  minor  degree 
for  expenditures  for  charitable  purposes  and  for  the 
maintenance  of  minor  judicial  offices.  But  after  making 
a  reasonable  allowance  for  these  differences  it  appears 
that  the  per  capita  cost  of  government  in  Nevada  is 
about  two  and  a  half  times  as  large  as  the  average  cost 
for  all  States.  This  is  adequately  explained  by  the  sparse- 
ness  of  population  together  with  the  high  scale  of  price 
and  wages  which  prevail  generally  in  Nevada. 

This  high  per  capita  cost  of  government  would  consti- 


176  v.i.v.r/'/o.y  /.v  \/;r.i/>.i 

tute  a  serious  burden  were  it  not  for  the  fact  that  incomes 
are  high  also,  and  that  the  per  capita  wealth  of  the  State 
is  extremely  large,  being  a  little  more  than  two  and  a 
half  times  as  large  as  the  per  capita  wealth  for  the  whole 
United  States.1  It  is  evident,  therefore,  that  the  tax  rate 
necessary  to  produce  a  sufficient  revenue  for  state  and 
county  purposes  in  Nevada  would  be  approximately  the 
same  as  the  average  rate  required  in  the  rest  of  the 
country  if  the  rate  were  imposed  on  all  property.  The 
exemption  of  one  very  important  class  of  property — 
mines — in  Nevada  necessitates  a  higher  tax  rate  than  is 
usual,  but,  considering  the  general  scale  of  incomes  it 
is  probable  that  this  is  not  more  burdensome  to  the 
Nevada  taxpayers  than  are  lower  rates  to  the  people  of 
other  States. 

The  present  tendency  is  in  the  direction  of  larger  gov- 
ernmental expenditures.  There  is  an  increasing  demand 
for  better  roads  which  is  pretty  sure  to  result  in  largely 
increased  expenditures.  As  population  increases,  the 
cost  of  education  per  child  attending  school  may  decrease 
a  little,  but,  since  the  income  derived  from  the  loan  of 
the  permanent  school  fund  will  not  increase  much,  that 
part  of  the  cost  which  is  paid  out  of  revenues  from  tax- 
ation will  have  to  increase  at  a  more  rapid  rate  than  does 
school  population.  The  growth  of  a  larger  stable  popu- 
lation with  a  corresponding  decrease  in  the  number  of 
homeless  migratory  workers,  would  reduce  the  necessary 
expenditures  for  charities  and  corrections. 

Just  how  large  a  share  of  the  social  income  should  be 
expended  by  governmental  agencies  and  what  share 

'Sec  Statistics  of  Wealth  on  p.  2. 


PUBLIC  EXPENDITURES  177 

should  be  left  for  private  expenditures  or  saving  cannot 
be  determined  from  mere  abstract  general  considera- 
tions. There  is  some  tendency  on  the  part  of  large  tax- 
payers to  accept  the  view  that  too  much  money  is 
expended  by  public  agencies,  while  the  people  who  pay 
little  or  no  tax  directly  are  inclined  to  look  with  favor 
on  larger  expenditures,  the  benefits  of  which  are  shared 
by  all.  To  a  man  who  owns  an  automobile  and  other 
property  valued  at  less  than  two  thousand  dollars,  the 
proposition  to  tax  the  county  a  hundred  thousand  dol- 
lars for  road  building  is  pretty  sure  to  be  attractive, 
for  he  will  receive  considerable  benefit  at  small  per- 
sonal cost.  To  the  millionaire  who  may  have  to  pay  ten 
or  fifteen  per  cent  of  the  tax,  the  proposition  is  pretty 
sure  to  be  less  attractive  unless  the  expenditure  will  be 
of  special  benefit  to  his  property.  In  this  diversity  of 
interest  as  between  the  owners  of  great  wealth  and  the 
owners  of  little  or  none,  there  lies  a  possibility  of 
more  serious  political  and  social  problems  than  have 
appeared  as  yet. 

If  the  increase  of  public  expenditures  and  of  govern- 
mental function  are  considered  as  tendencies  toward 
socialism — using  that  term  in  a  rather  general  sense — it 
is  evident  that  the  American  people  are  tending  toward 
socialism.  In  addition  to  the  causes  of  this  movement  as 
they  are  found  in  most  American  States,  there  is  a  special 
situation  in  Nevada  which  may  accelerate  the  movement 
to  an  unusual  degree.  In  general,  the  people  who  pay 
direct  taxes  of  more  than  a  merely  nominal  amount  are 
the  conservatives  in  relation  to  the  increase  of  public 
expenditures.  Where  the  property  is  in  the  ownership 


178  7M.V.1770.Y    /\     \/:i  ADA 

of  large  numbers  of  middle-class  owners,  the  general 
community  sentiment  is  conservative,  and  the  property 
owners  may  be  able  to  control  politically  because  of 
numerical  superiority.  Where  the  ownership  is  mainly 
in  the  hands  of  a  few,  and  where  the  great  majority  of 
the  people  pay  no  direct  taxes,  or  taxes  of  only  a  nominal 
amount,  we  may  find  the  control  of  public  expenditures 
resting  in  the  hands  of  the  majority  of  voters — of  voters 
who  might  be  able  to  impose  higher  taxes  on  the  com- 
munity without  directly  paying  more  than  a  negligible 
part  of  it  themselves. 

There  are  three  main  classes  of  property  in  Nevada : 
(1)  The  public  utilities,  constituting  about  41  per  cent 
of  all  assessed  property,  and  almost  wholly  owned  by 
people  whose  homes  are  not  in  Nevada;  (2)  the  mines, 
which  pay  on  equipment  and  proceeds  about  15  per  cent 
of  the  taxes  and  which  are  owned  chiefly  by  nonresi- 
dents; (3)  land  and  live  stock,  which  constitute  about 
24  per  cent  of  all  assessed  property  and  which  are  mainly 
in  the  ownership  of  corporations,  a  considerable  number 
of  which  are  owned  and  controlled  by  nonresidents. 
Probably  the  owners  of  two-thirds  of  all  of  the  taxable 
property  of  Nevada  are  not  citizens  of  this  State. 

Furthermore,  the  number  of  middle-class  owners  is 
comparatively  small.  The  conservative  influence  of  the 
farmer  voters  is  small,  because  they  do  not  cast  over  ten 
per  cent  of  the  votes — probably  not  over  seven  per  cent. 
I  would  estimate  that  the  number  of  voters  who  pay 
sufficient  direct  taxes  to  cause  them  to  take  the  conserva- 
tive side  of  a  question  relating  to  public  expenditures 
does  not  exceed  twenty  per  cent  of  all  voters,  although 


PUBLIC  EXPENDITURES  179 

• 

the  percentage  has  been  increased  a  little  as  a  result  of 
equal  suffrage.  Consonant  with  this  is  the  fact  that  a 
campaign  for  official  position  on  a  platform  of  retrench- 
ment and  economy  is  not  considered  good  politics.  The 
practical  situation  of  most  voters  tends  to  make  them 
indifferent  to  the  question  of  economy  and  antagonistic 
to  retrenchment. 

Here  is  a  lack  of  political  and  social  equilibrium. 
It  may  be  possible  for  the  few  to  maintain  practical 
control  in  sufficient  measure  to  prevent  any  radical 
change  in  our  social  system,  but  such  control  by  a 
few  is  not  in  accordance  with  the  American  ideals  of 
democracy.  A  marked  increase  in  the  number  of  farm- 
ers and  of  other  middle-class  property  owners  would 
constitute  the  best  assurance  of  reasonable  stability  in 
the  social  order. 


CHAPTER  IX 
PUBLIC  INDEBTEDNESS 

The  men  who  sat  in  the  Nevada  constitutional  con- 
vention were  not  under  any  illusion  as  to  the  financial 
difficulties  in  the  way  of  the  State  about  to  be  created. 
There  was  danger  that  there  would  be  an  excessive 
public  debt.  The  Territory,  in  the  short  period  of  its 
existence,  had  incurred  a  large  indebtedness  for  cur- 
rent expenses,  and  the  expenditures  of  the  State  Gov- 
ernment were  sure  to  be  much  larger.  Care  was  taken, 
therefore,  to  introduce  safe-guarding  provisions  into 
the  fundamental  law.  The  maximum  limit  of  state 
indebtednes  was  fixed  at  three  hundred  thousand  dol- 
lars, but  the  limit  did  not  apply  in  case  of  money 
borrowed  to  repel  invasion,  suppress  insurrection,  or 
defend  the  State  in  time  of  war.  The  State,  moreover, 
was  to  assume  the  territorial  debt,  and  this  might  be 
in  excess  of  the  three-hundred-thousand-dollar  limit. 
Since  the  territorial  debt  amounted  to  about  $280,000' 
the  practical  limit  of  state  indebtedness  was  $580,000. 

Other  constitutional  provisions  relating  to  debt  apply 
to  counties,  towns,  and  cities.  They  are  forbidden  to 
lend  their  money  or  credit  to  corporations,  railroad 
companies  excepted.  The  Legislature  is  directed  to 
limit  the  borrowing  power  of  all  local  governmental 
agencies  except  for  the  purpose  of  securing  a  supply  of 
water.  The  State,  too,  is  prohibited  from  lending  its 

'An  estimate  based  on  data  found  in  the  report  of  the  State  Controller 
for  1866,  pp.  9  and  19. 


PUBLIC  INDEBTEDNESS  181 

money  or  credit  to  any  corporation  and  from  assuming 
the  indebtedness  of  any  county,  town,  or  city. 

THE  TERRITORIAL  DEBT 

In  the  course  of  three  and  a  half  years  the  Territory 
of  Nevada  had  incurred  a  debt  of  $280,000.  Part  of 
this  was  a  floating  debt  and  part  was  bonded,  and  on 
some  of  the  bonds  the  State  paid  18  per  cent  interest. 
In  1867  the  territorial  debt  was  refunded  by  an  issue 
of  new  bonds  bearing  15  per  cent  interest.  These  were 
retired  in  1872  by  a  new  issue  of  fifteen-year  bonds 
which  bore  9£  per  cent  interest  and  which  sold  at  par. 
This  reduction  of  the  rate  of  interest  may  be  attributed 
in  part  to  the  improvement  in  credit  conditions  gen- 
erally in  the  period  following  the  close  of  the  Civil 
War,  but  in  greater  degree  to  the  improved  credit  of 
Nevada,  and  this  was  due  mainly  to  the  completion 
of  the  Central  Pacific  Railroad.  In  1879,  while  these 
bonds  still  lacked  eight  years  of  maturity,  they  were 
repurchased  by  the  State  at  a  premium  of  nearly  30 
per  cent  and  were  retired  by  a  new  issue  of  5-per-cent 
bonds  which  are  irredeemable.  The  State  was  able  to 
dispose  of  these  bonds  by  placing  them  in  the  state 
permanent  school  fund  where  they  remain  to  the 
present  time.1 

In  connection  with  the  refunding  operations  of  1872 
the  Legislature  resorted  to  subterfuge  to  increase  its 
borrowing  power.  The  State  at  this  time  had  a  bonded 

'At  about  this  date  several  counties  issued  bonds  for  various  purposes. 
The  counties  possessing;  the  more  stable  resources  issued  their  bonds  at  10 
per  cent  interest,  while  those  of  inferior  credit  paid  12  to  15  per  cent.  It 
is  a  fair  inference,  therefore,  that  the  State  could  not  have  sold  these  five- 
per-cent  bonds  in  the  regular  bond  market  at  par. 


182  7M.V.I770.V   l\   \KV.\lt.\ 

debt  almost  as  large  as  the  constitution  permitted  and 
also  a  large  floating  indebtedness.  An  additional  loan 
was  desired  and,  in  order  to  evade  the  constitutional 
provision,  the  territorial  debt  was  declared  to  be  a 
hundred  thousand  dollars  larger  than  it  actually  had 
been.  The  theory  of  the  act  was  that  the  interest  paid 
on  the  debt  by  the  State  constituted  a  part  of  the  debt 
and  by  this  means  the  debt  was  increasing  with  every 
interest  payment.  The  total  bonded  debt  at  the  end  of 
1872  was  $660,000,  an  amount  $80.000  in  excess  of  the 
constitutional  authorization,  and  there  was  a  floating 
debt  of  $213,014.  This  is  the  largest  debt  ever  reported 
in  the  history  of  the  State.1 

The  rapid  growth  of  the  state  debt  during  the  early 
years  of  statehood  was  due  in  some  measure  to  a 
decrease  in  the  productivity  of  mines,  but  in  much 
greater  degree  to  the  success  of  the  mine  owners  in 
securing  legislative  exemption  from  a  part  of  the  taxes 
contemplated  by  the  constitution.2  On  account  of  the 
peculiar  character  of  the  mining  industry,  it  was 
greatly  to  the  interest  of  the  owners  of  the  profitable 
mines  to  have  the  State  and  county  resort  to  borrowing 
in  place  of  increasing  the  taxes.  To  the  ordinary  tax- 
payer a  public  loan  means  a  mere  postponement  of  tax- 
ation, but  to  the  mine  owner  postponement  is  ordinarily 
equivalent  to  evasion,  since  the  mine  is  pretty  sure  to 
be  worked  out  long  before  the  debt  is  paid.  To  a 
marked  extent  the  large  borrowings  made  in  time  of 

'This  was  made  necessary  in  part  by  the  embezzlement  of  funds  by  the 
first  State  Treasurer  whose  funds  were  deficient  by  $106,432.  See  Report  of 
State  Controller  for  1869,  p.  144. 

=See  p.  75. 


PUBLIC  INDEBTEDNESS  183 

great  mining  activity  and  for  the  purpose  of  maintain- 
ing government  for  mining  communities  have  been 
paid  in  later  years  by  the  more  stable  agricultural  and 
railroad  interests.1  The  mining  industry  during  the 
first  fifteen  years  of  territorial  and  state  experience 
made  some  pretty  large  fortunes,  but  the  State  and  the 
counties  had  failed  to  pay  the  cost  of  government  by 
about  two  million  dollars.2 

The  state  debt  was  reduced  somewhat  during  the 
years  of  maximum  mine  production  (1875-1878)  so  that 
the  indebtedness  came  within  the  constitutional  limit, 
and  since  that  time  it  has  not  undergone  any  marked 
reduction.  In  addition  to  the  territorial  debt,  now 
considered  to  be  $380,000,  the  bonded  indebtedness 
since  1880  has  varied  from  $131,000  in  1886  to  $300,000 
in  1914.  During  the  last  twenty  years  there  has  been 
little  change  in  the  state  bonded  indebtedness.  The 
constitutional  limit  has  prevented  any  large  increase. 
The  payment  of  one-twentieth  of  each  issue  of  bonds 
annually  is  regularly  reducing  the  old  issues,  but,  with 
almost  equal  regularity,  new  bonds  are  issued.  Recent 
bonds  bear  5  per  cent  interest,  but  this  constitutes  no 
measure  of  the  State's  credit  because  the  bonds  are  all 
placed  in  the  state  school  fund  at  par,  the  rate  of 
interest  being  an  arbitrary  affair,  determined  not  by 
market  conditions  but  by  legislative  authority. 

A  consequence  of  the  practise  of  the  State  in  keep- 
ing its  debt  nearly  up  to  the  constitutional  limit  is 

'See  case  of  Lincoln  County  debt,  p.  186. 

=The  total  indebtedness  of  all  counties  in  1873  was  $1,187,963.  The 
figures  for  earlier  years  are  not  available.  See  Report  of  Controller,  1873, 
p.  89. 


184  TAXATION  i\  \/;r.i/>.i 

that  it  has  not  been  in  a  position  to  meet  an  emergency 
or  to  undertake  an  enterprise  calling  for  a  large  loan. 
On  several  occasions  the  State  has  been  seriously 
embarrassed  by  this  fact  and,  more  recently,  the  grow- 
ing interest  in  the  good-roads  movement  has  made  it 
seem  desirable  to  increase  the  borrowing  power  by 
constitutional  amendment.  At  the  general  election  of 
1916  the  people  adopted  such  an  amendment  by  a  very 
large  majority,  and  the  Legislature  may  now  authorize 
an  indebtedness  not  to  exceed  one  per  cent  of  the 
assessed  valuation  on  which  ad  valorem  taxes  are 
payable. 

It  is  greatly  to  be  desired  that  the  State  shall  exer- 
cise greater  restraint  in  relation  to  this  new  power 
to  create  debts  than  it  did  in  the  former  case.  If  the 
debt  grows  up  to  the  new  constitutional  limit  in  the 
course  of  ten  years,  there  will  be  a  lack  of  elasticity 
again.  The  power  of  the  Legislature  to  borrow  at 
any  particular  time  depends,  not  on  the  existence  of 
a  high  constitutional  limit,  but  on  the  distance  between 
that  limit  and  the  existing  debt.  Particularly  should 
the  State  avoid  a  bad  policy  in  relation  to  borrow- 
ing for  road  building  and  maintenance.  Only  the 
more  durable  sorts  of  road  improvements  should  be 
financed  by  means  of  loans  and  such  loans  should  be 
for  relatively  short  periods — for  periods  not  exceeding 
the  assured  life  of  the  improvements.  Otherwise  the 
indebtedness  will  accumulate  through  the  necessity  of 
successive  renewals  of  such  improvements. 


PTHLIC  IxnEBTKDXKSti  185 

COUNTY  INDEBTEDNESS 

Since  there  was  no  constitutional  limit  on  county 
indebtedness,  the  debt-making  disposition  of  the  people 
of  the  State  is  more  in  evidence  in  the  case  of  county 
debts.  The  constitution  imposed  upon  the  Legislature 
the  duty  of  restricting  county  indebtedness.  The  Leg- 
islature has  not  passed  a  general  act  for  this  purpose, 
but  has  refused  to  permit  the  issue  of  bonds  by  any 
county  except  by  specific  legislative  act  in  the  case  of 
each  issue.  Presumably  the  theory  of  this  procedure 
is  that  it  is  the  duty  of  the  Legislature  to  scrutinize 
each  proposed  loan  in  the  interest  of  conservatism.  In 
practise  all  legislative  bills  authorizing  county  loans 
are  referred  to  a  committee  consisting  of  the  members 
of  the  Legislature  from  the  county  concerned  and  what- 
ever this  committee  recommends  is  practically  sure  to 
be  concurred  in  by  the  Legislature  as  a  matter  of 
legislative  courtesy.  This  means  that  the  Legislature 
does  not  in  fact  exercise  any  restrictive  authority  over 
a  county.  A  general  restrictive  law  with  a  require- 
ment that  upon  the  initiative  of  the  Board  of  County 
Commissioners  or  upon  the  petition  of  taxpayers  the 
question  of  each  issue  be  referred  to  a  vote  of  the  peo- 
ple, would  be  more  effective  in  checking  unwarranted 
borrowing. 

During  the  first  nine  or  ten  years  of  statehood  a  large 
county  indebtedness  was  incurred.  This  was  reduced 
in  several  counties  and  notably  in  Storey  County  after 
1875  when  the  mine  owners  were  required  to  pay  the 
regular  county  tax  rate  on  the  net  proceeds.  Dur- 
ing the  period  of  small  mining  activity  (1880-1902) 


186  VM.v.i'/vo.y  /.\ 

the  counties  became  more  conservative  and  with  one 
exception  the  debts  were  reduced  to  small  proportions. 
During  the  recent  period  of  general  industrial  revival 
the  county  borrowings  have  increased  notably.1 

The  debt  of  Lincoln  County  calls  for  some  special 
mention.  The  original  debt  was  incurred  in  the  midst 
of  a  mining  boom  which  came  to  an  end  almost  imme- 
diately after  the  debt  was  incurred.  When  the  debt 
was  incurred  the  taxable  valuation  of  the  county  was 
nearly  four  million  dollars.  Three  years  later  it  was 
only  a  little  over  one-third  of  this  amount,  and  by  1886 
the  assessed  valuation  was  less  than  nine  per  cent  of 
what  it  was  when  the  bonds  were  issued.  These  bonds, 
amounting  to  $179,500,  were  issued  in  part  to  pay  for 
a  new  courthouse  necessitated  by  the  removal  of  the 
county-seat  to  the  big  mining  camp.  They  also  served 
to  take  up  a  rather  large  floating  debt  incurred  on 
account  of  the  rapid  growth  of  the  mining  camp.  The 
county  rate  on  the  proceeds  of  mines  at  this  time  was 
so  small  that  the  chief  burden  of  local  taxes  was  carried 
by  other  property,  and  there  was  very  little  property 
outside  of  the  mining  camp  at  Pioche. 

When  the  bonds  were  issued  provision  was  made  for 
a  tax  levy  of  45  cents  on  the  hundred  dollars  of  assessed 
valuation  to  pay  the  interest  and  to  apply  on  a  sinking 
fund  with  a  further  provision  to  the  effect  that  in  case 

'County  bonded  indebtedness  of  counties  of  Nevada  for  various  years  as 
reported  by  the  State  Controller : 

Year                             All  counties  except  Lincoln  Lincoln  County 

1873 $832,227  $179.500 

1880 533,226  220,473 

1902 160,900  629,662 

1906 237,000  651,917 

1916 1,452.850  435,000 


PUBLIC  INDEBTEDNESS  187 

this  tax  should  not  produce  revenue  sufficient  to  pay 
the  interest  there  should  be  a  transfer  of  money  from 
the  county  general  fund  to  the  interest  fund.  The 
bonds  bore  10  per  cent  interest  and  there  was  never  a 
time  when  the  45-cent  tax  rate  produced  sufficient  rev- 
enue to  pay  the  interest  on  the  bonds.  Since  current 
revenues  were  too  small  for  current  expenses,  a  new 
floating  debt  was  incurred  immediately.  After  the 
value  of  property  had  depreciated,  the  county  failed 
to  pay  the  interest  on  the  bonds  and  the  debt  began 
to  grow  by  the  addition  of  the  unpaid  interest.  Within 
ten  years  the  debt  had  become  larger  than  the  total 
assessed  valuation  of  the  county  and  this  condition 
continued  for  ten  or  fifteen  years. 

When  the  San  Pedro,  Los  Angeles  and  Salt  Lake 
Railroad  was  projected  to  pass  through  Lincoln  County 
it  was  evident  to  the  men  back  of  the  project  that  if 
they  should  build  the  road  they  would  be  responsible 
for  most  of  the  old  debt,  since  the  railroad  would  be  the 
chief  property  of  the  county  and  would  be  of  sufficient 
value  to  make  the  county  solvent.  They,  therefore, 
proceeded  to  buy  up  the  old  bonds,  securing  them,  it 
is  said,  at  a  very  low  price.  Soon  after  the  county's 
credit  had  been  improved  by  the  construction  of  the 
railroad  the  bonds  were  refunded,  the  owners  of  the 
old  bonds  accepting  new  bonds  with  a  face  value  equal 
to  65  per  cent  of  the  old  debt  including  interest.  The 
new  bonds  bore  4  per  cent  interest.  A  few  years  later 
these  bonds  were  sold  to  the  State  on  account  of  the 
state  school  fund,  the  State  getting  them  at  a  consider- 
able discount.  The  experience  of  Lincoln  County  shows 


YM.V.I770.Y   l\    \  i:\Mt_ | 

how  a  big  mining  company  may  by  means  of  loans  escape 
for  all  time  the  cost  of  government.  The  debt  incurred 
in  1873  was  not  paid  at  a  later  time  by  the  men  respon- 
sible for  its  creation  or  by  the  property  interests  for 
the  benefit  of  which  it  was  created.  The  debt  is  now 
being  paid  by  the  railroad,  by  a  few  scattered  farmers 
and  stockmen,  and  by  new  mining  interests.  In  cases 
of  this  kind  of  debt  there  is  not  a  deferred  payment 
but  a  shifted  payment.  To  a  certain  extent  the  big 
mining  gains  of  the  period,  1871-1875,  were  secured  at 
the  expense  of  the  more  permanent  interests  of  the 
county  forty  years  later. 

The  public  indebtedness  of  Nevada  is  unusually  large 
for  a  State  with  no  large  city.  The  per  capita  state 
debt  less  sinking  fund  assets  is  nearly  twice  as  large 
as  the  average  for  all  States.1  The  per  capita  county 
debt  is  about  three  and  a  half  times  as  large  as  the  per 
capita  for  the  counties  of  all  States.  The  per  capita 
school  district  debt  for  all  districts  not  including  incor- 
porated cities  is  over  three  times  the  average  for  such 
school  districts  of  all  States.  The  per  capita  debts  of 
incorporated  cities  are  about  forty  per  cent  larger  than 
in  the  cities  of  the  same  size  class  of  all  States.  In  some 
States  and  in  many  cities  the  indebtedness  is  balanced 
in  large  measure  by  publicly  owned  water-works  and 
other  utilities,  and  in  such  cases  the  interest  is  not  a 
charge  on  the  ordinary  public  revenues,  but  is  paid  out 
of  the  earnings  of  the  property.  There  is  little  or  no 
such  public  property  in  Nevada,  and  consequently  the 

'Based  on  statistics  in  Census  Report  on  Wealth,  Debt,  and  Taxation 
for  1913. 


PUBLIC  INDEBTEDNESS  189 

burden  of  debt  on  the  public  revenues  is  relatively 
heavier  than  the  above  figures  would  indicate.1 

If  the  comparison  be  made,  not  on  the  basis  of  popu- 
lation but  on  that  of  wealth,  the  results  are  more  fav- 
orable to  Nevada.  Probably  the  total  public  indebted- 
ness is  not  very  much  larger  in  proportion  to  the  total 
wealth  of  the  State  than  is  the  average  for  all  States. 
But,  taking  into  consideration  the  fact  that  much  of 
the  property  in  Nevada — the  mines — is  not  taxable  and 
the  further  fact  that  neither  the  State  nor  any  of  its 
cities  owns  any  income-producing  property,  it  would 
appear  that  the  burden  of  indebtedness  is  more  than 
ordinarily  heavy  so  far  as  the  taxable  property  is  con- 
cerned. In  some  cases  the  burden  is  all  the  greater 
because  the  debt  was  incurred  for  current  expenses  and 
for  improvements  of  transient  value,  so  that  it  is  not 
balanced  by  assets  of  any  kind. 

'Public  utilities  of  small  value  are  owned  by  two  counties. 


CHAPTER  X 

THE  PROBLEM  OF  TAX  REFORM  IN  NEVADA 
It  is  not  a  part  of  my  purpose  to  set  forth  a  program 
for  tax  reform.  The  practical  experience  of  the  State 
has  demonstrated  that  there  is  a  need  for  certain  devel- 
opments in  the  system  of  taxation,  and  these  needs  have 
been  pointed  out  in  the  preceding  pages  in  connection 
with  that  experience.  A  few  observations  relative  to 
the  situation  in  Nevada  in  relation  to  tax  reform  are 
added  in  this  concluding  chapter. 

In  many  respects  the  problems  of  tax  reform  in 
Nevada  are  like  those  of  other  States,  and  these  call 
for  no  extended  discussion  in  this  place.  In  the  first 
place,  this  subject  has  to  compete  with  many  other 
important  questions  for  public  interest.  Few  persons 
give  sufficiently  sustained  attention  to  the  subject  to 
permit  of  the  development  of  sound  judgments.  Popu- 
lar study  of  public  finance  is  discouraged  by  the  lack 
of  suitable  literature  setting  forth  the  essential  facts 
in  a  lucid  manner  and  by  the  failure  of  the  various 
public  authorities  to  publish  financial  reports  in  such  a 
way  that  the  intelligent  citizen  can  understand  them 
without  excessive  labor.1 

'In  the  absence  of  some  public  body,  such  as  the  Tax  Commission,  to 
make  a  special  study  of  the  conditions  and  needs  of  Nevada,  there  has  been 
a  notable  tendency  on  the  part  of  Nevada  legislators  to  copy  its  tax-reform 
legislation  from  California.  Sometimes  this  has  worked  well,  but  in 
numerous  instances  the  California  laws  have  failed  to  fit  Nevada  conditions. 
While  Nevada  should  give  due  weight  to  the  experience  of  other  States,  it 
is  not  creditable  that  the  laws  of  other  States  should  be  copied  in  a  slavish 
and  indiscriminate  way.  After  proper  study  the  State  should  act  on  its  own 
initiative. 


PROBLEM  OF  TAX  REFOlfM  191 

Then  there  are  certain  old  theories  of  taxation  which 
have  come  down  from  the  early  part  of  the  last  century 
and  which  are  not  valid  in  relation  to  present  economic 
and  political  conditions.  The  fact  that  these  theories 
are  not  based  on  any  serious  study  of  the  subject  of 
taxation,  but  are  commonly  taken  to  be  self-evident, 
and  the  fact  that  their  chief  support  is  custom,  makes 
progress  necessarily  slow. 

No  tax  reform  can  be  effected  without  modifying  the 
situation  for  private  interests.  A  good  system  of  tax- 
ation is  favorable  to  business  interests  generally  and  a 
bad  system  is  hurtful,  but,  in  any  change  for  the  better, 
some  interests  are  pretty  sure  to  be  deprived  of  certain 
advantages  which  they  have  enjoyed.  As  a  rule  the 
business  interests  likely  to  suffer  from  a  change  are 
represented  by  the  more  agressive  and  alert  members 
of  a  community,  while  the  much  greater  number  of 
people  who  stand  to  benefit  from  the  reform  are  rela- 
tively passive  and  indifferent. 

In  their  efforts  to  introduce  reforms,  legislative 
bodies  frequently  fail  to  provide  for  a  gradual  and 
orderly  change  from  the  old  to  the  new.  As  a  result 
the  process  of  change  creates  needless  financial  difficul- 
ties for  the  government  and  needless  annoyance  to  the 
taxpaying  public,  and  this  tends  to  make  opponents 
to  some  reforms  which  otherwise  might  be  popular. 

There  has  been  some  lack  of  continuity  in  financial 
policy  because,  with  a  constant  change  in  the  personnel 
of  the  Legislature  and  of  administrative  bodies,  there 
has  been  too  little  experience  and  too  little  knowledge 
of  their  predecessors'  experience  on  the  part  of  officers 


192  TAXATION  IX  XEVM>\ 

responsible  for  financial  policy.  The  work  of  the  State 
Tax  Commission  is  remedying  this  defect  and  making 
possible  a  more  consistent  sort  of  progress. 

In  Nevada,  however,  there  are  a  few  special  problems 
connected  with  tax  reform,  and  these  call  for  some  dis- 
cussion. The  constitutional  provisions  relating  to  tax- 
ation are  too  rigid  to  permit  of  an  orderly  progress  in 
the  way  of  adapting  our  system  of  taxation  to  present- 
day  needs.  Apparently  these  provisions  grew  out  of 
a  feeling  that  the  people  and  the  Legislature  could  not 
be  trusted  to  do  justice  to  the  various  interests  and  to 
conserve  the  permanent  interests  of  the  State.  There 
was  much  in  early  conditions  to  justify  this  attitude. 
Society  lacked  stability  in  every  way,  and  this  lack  of 
stability  was  pretty  sure  to  be  reflected  in  public  poli- 
cies generally,  so  far  as  the  constitution  imposed  no 
restrictions.  The  value  of  rather  numerous  and  rigid 
constitutional  restrictions  under  such  circumstances 
cannot  be  questioned. 

Moreover,  Nevada  has  had  an  unusual  experience  in 
that  the  period  of  general  social  instability  was  not 
confined  to  the  generation  of  early  pioneering.  After 
more  than  fifty  years  of  statehood  there  persist  many 
important  elements  of  social  instability.  On  Account 
of  the  peculiar  industrial  conditions  existing  in  Nevada, 
there  is  an  unusually  large  number  of  homeless  migra- 
tory workers  with  no  permanent  interests  in  any  com- 
munity, while  the  number  of  home-owning  farmers  and 
other  small  property  owners  is  relatively  small.  There 
has  been  a  certain  development,  however,  in  the  direc- 
tion of  greater  social  stability.  Just  how  far  it  would 


PROBLKU  OF  TAX  REFORM          193 

go  to  justify  the  State  in  liberalizing  its  constitution — 
in  removing  restrictions  on  the  action  of  the  Legisla- 
ture and  of  the  people — is  not  certain. 

The  State  is  now  confronted  with  this  situation:  In 
order  to  permit  of  any  orderly  progress  along  the  lines 
of  tax  reform,  we  must  abandon  some  of  the  constitu- 
tional restrictions  and  trust  more  to  the  discretion  of 
the  Legislature  and  of  the  people.  But  there  is  some 
doubt  as  to  whether  the  State  has  reached  that  degree 
of  social  stability  and  political  maturity  necessary  to 
make  such  a  course  safe.  So  far  all  efforts  to  secure 
such  amendments  have  failed.  I  believe  that  the  State 
could  at  this  time  adopt  the  amendment  proposed  by 
the  Tax  Commission  without  undue  risk.  The  aim  of 
this  proposed  amendment  is  to  permit  of  a  proper 
classification  of  property  for  purposes  of  taxation.  We 
must  recognize  that  uniformity  of  procedure  in  relation 
to  the  taxation  of  all  sorts  of  property  which  are  far 
from  uniform  in  character  does  not  secure  uniformity 
in  practical  results.  Uniformity  in  any  useful  sense  of 
the  word  can  be  secured  only  by  adapting  the  pro- 
cedure of  taxation  to  the  character  of  the  property  to 
be  taxed.  The  proposed  amendment  is  conservative  in 
character  and  it  meets  with  the  approval  of  the 
National  Tax  Association  and  of  the  great  majority 
of  experts  in  the  subject  of  taxation.  It  is  proposed 
to  amend  Article  X  of  the  constitution  to  read  as 
follows  : 

The  power  of  taxation  shall  never  be  sur- 
rendered, suspended,  or  contracted  away.  All 
taxes  shall  be  uniform  upon  the  same  class  of 


194  TAXATION  IN  NK  \\l>  \ 

property  within  the  territorial  limits  of  the 
authority  levying  the  tax,  and  shall  be  levied 
and  collected  for  public  purposes  only. 

We  are  living  in  a  time  of  large  political  and  eco- 
nomic readjustments.  The  mere  fact  that  a  custom, 
law,  or  institution  is  old  is  an  increasingly  weak  argu- 
ment for  its  perpetuation.  The  demand  everywhere  is 
for  such  changes  as  may  be  needful  in  view  of  present- 
day  circumstances.  This  is  particularly  true  in  the 
field  of  taxation.  The  industrial  evolution  of  the  last 
half-century  calls  for  a  corresponding  evolution  in  the 
system  of  taxation.  In  Nevada  there  is  the  special 
demand  for  an  adjustment  to  unique  economic  condi- 
tions. It  is  not  sufficient  to  copy  the  laws  of  other 
States  into  our  statute  books.  A  copied  system,  like  a 
purely  traditional  system,  is  sure  to  be  a  misfit.  For  a 
system  of  taxation  that  will  contribute  most  to  the 
public  welfare  the  State  must  look  to  the  wise  initiative 
and  public  spirit  of  its  own  citizens. 


BIBLIOGRAPHICAL 


The  bibliography  of  taxation  in  any  State  is  found 
mainly  in  official  documents,  the  character  of  which  is 
so  well  known  that  no  detailed  reference  is  necessary. 
The  author  has  made  large  use  of  the  territorial  and 
state  laws  of  Nevada  and  California  and  of  legislative 
journals.  He  has  examined  the  messages  of  the  Gov- 
ernors of  Nevada  and  the  reports  of  all  state  financial 
officers  from  the  beginning  down  to  the  present  time. 
The  tax  rolls  of  the  various  counties  have  been  con- 
sulted and  newspapers  have  yielded  their  quota  of 
information.  Much  use  has  been  made  of  the  United 
States  Census  Reports.  Litigation  has  been  traced 
through  the  state  and  federal  courts.  Among  the  his- 
tories of  Nevada,  that  by  Bancroft  and  that  by  Angel 
have  been  most  useful.  The  debates  of  the  Nevada  Con- 
stitutional Convention  are  most  valuable.  Considerable 
information  and  much  help  on  the  side  of  interpretation 
have  come  through  numerous  personal  conversations 
with  taxpayers  and  financial  officers  of  county  and 
State.  In  the  background  there  are  the  reports  of 
various  State  Tax  Commissions,  the  publications  of  the 
National  Tax  Association,  the  standard  works  on  public 
finance,  and  other  well-known  literary  evidences  of  the 
growing  interest  in  taxation. 


NEVADA  HISTORICAL  SOCIETY 
PUBLICATIONS 


The  following  publications  issued  by  the  Nevada  His- 
torical Society  are  sent  free  to  members  and  in  exchange 
for  certain  other  books  and  newspapers.  They  are  for 
sale  at  the  prices  stated.  All  orders  and  remittances 
should  be  addressed  to  the  Secretary,  Jeanne  Elizabeth 
Wier,  Reno,  Nevada. 

I.    Biennial  Reports : 

1.  First  Biennial   Report  of  the   Nevada  Historical    Society, 

1907-8 ;    leading  historical  papers  and  poems  as  follows : 
Arts  and  Crafts  of  Nevada  Indians.    Mrs.  Abram  Conn. 
The  Battle-Born.    Sam  P.  Davis. 

The  Need  of  a  Brief  History  of  Nevada.    Mrs.  M.  S.  Doten. 
Reminiscences  of  Nevada.    R.  L.  Fulton. 
Early  Days  in  Lincoln  County.    Charles  Gracey. 
The   Adjustment   of   the   Boundaries   of   Nevada.      Beulah 

Hershiser. 

The  Nevada  Meteorite.    Dr.  W.  P.  Jenney. 
The  Mission  of  the   State   Historical    Society.     Jeanne  E. 

Wier. 
The  True  History  of  the  Flag,  "Old  Glory,"  from  account 

furnished  by  Capt.  and  Mrs.  Chas.  H.  Rowland.     Jeanne 

E.  Wier. 
Carson  City,  1909.    Paper,  75  cents  ;   cloth,  $1. 

2.  Second  Biennial  Report  of  the  Nevada  Historical  Society, 

1909-10;   leading  historical  papers  and  poems  as  follows: 
Pioneer  Days  in  Nevada.    Allen  C.  Bragg. 
John  C.  Fremont's  Expedition  in  Nevada,  1843-4.     James 

U.  Smith. 
The    Significance    of    Nomenclature    in    Washoe    County, 

Nevada.    Audrey  Winifred  Ohmert. 

The  Negative  Quality  iu  Nevada  History.     Samuel  Platt. 
Ancestry   of   Henry   Thompkins    Paige   Comstock,    written 

from  data  furnished  by  L.  W.  Comstock.    Jeanne  E.  Wier. 


198  TAXATION  IN  NEVADA 

Experiences  of  a  Nevada  Pioneer,  Aaron  D.  Campton. 
Jeanne  E.  Wier. 

The  Work  of  the  Western  State  Historical  Society  as  illus- 
trated by  Nevada.  Jeanne  E.  Wier. 

Truckee  Meadow  Memoirs.    Rev.  F.  M.  Willis. 

Carson  City,  1911.    Paper,  75  cents ;   cloth,  $1. 

3.  Third  Biennial  Report  of  the  Nevada  Historical  Society, 

1911-12 ;   leading  historical  papers  and  poems  as  follows : 
The  Obligation  of  Nevada  Toward  the  Writing  of  Her  Own 

History.    Dr.  H.  E.  Bolton. 

The  Fault  in  the  Coinstock.    James  V.  Comerford. 
Reminiscences  of  James  H.  Kinkead.    R.  L.  Fulton. 
The  Pioneers.    Judge  C.  C.  Goodwin. 
The  Significance  of  the  Nomenclature  in  Churchill,  Douglas, 

Lyon,  Ormsby,  and  Storey  Counties.  Nevada.     Vera  E. 

Hash,  Cora  M.  Cleator,  and  Florence  L.  Bray. 
The  Influence  of  Nevada  on  the  National  Mining  Legislation 

of  1866.    Beulah  Hershiser. 
The  First  Train  Robbery  on  the  Pacific  Coast.     James  H. 

Kinkead. 
Some   Steps   in   the  Evolution   of   Nevada   Merchandising. 

Dr.  H.  E.  Reid. 
Recollections    of    the    Early    History    of    Smith    Valley, 

Nevada.    Timothy  B.  Smith. 

The  Reign  of  Violence  in  El  Dorado  Canyon,  from  manu- 
script furnished  by  John  L.  Riggs.    Jeanne  E.  Wier. 
Carson  City,  1913.    Paper,  75  cents ;  cloth,  $1. 

4.  Fourth  and  Fifth  Biennial  Reports  of  the  Nevada  Histori- 

cal Society,  1913-16. 
Carson  City,  1917.  (Paper,  for  members  and  exchange  only.) 

II.  Nevada  Historical  Society  Papers,  Vol.  I,  1913-16.  Histori- 
cal papers  and  poems  as  follows : 

Julia,  Medley  of  the  Cornstock  Mines.    Anonymous. 

A  Faithful  Account  of  the  Last  Indian  Uprising  in  Nevada. 
Fannie  Mayer  Bangs. 

Special  Legislation  in  Nevada  as  Illustrated  by  the  Laws 
of  1913.  Clara  Smith  Beatty. 

Meditation.    Mrs.  Edward  D.  Boyle. 

Nevada,  Historic  and  Prehistoric.    R.  L.  Fulton. 

The  Oak  and  the  Vine.    Roll  in  M.  Daggett. 

Virginia  City.    Jos.  T.  Goodman. 

Fourth  of  July  Address.  Carson  City.  1915.  Judge  C.  C. 
Goodwin. 


HISTORICAL  SOCIETY  PUBLICATIONS  199 

The  Artistic  Idea  as  Expressed  by  Early  Nevada  Authors. 
Jessie  Hylton. 

Nevada  in  History  and  Prophecy.    George  Wharton  James. 

Memorial  Articles.  Dr.  Joseph  E.  Stnbbs,  Allen  Bragg,  and 
Mary  S.  Doten. 

Religions  Development  in  Nevada.    Alice  Frances  Trout. 

Mark  Twain's  Relation  to  Nevada  and  to  the  West.  Jeanne 
E.  Wier. 

Mementoes  of  Nevada's  Olden  Days  and  the  Work  of  the 
Nevada  Historical  Society  as  Reviewed  in  Nevada's  Semi- 
centennial Year.  Jeanne  E.  Wier. 

Pageant  of  Nevada  History.    Jeanne  E.  Wier. 

Semicentennial  of  Nevada  History.    Jeanne  E.  Wier. 

Manuscripts  of  Nevada  Pioneers  as  found  in  the  Bancroft 
Library,  University  of  California.  Edited  by  Jeanne  E. 
Wier. 

Carson  City,  1917.    Paper,  75  cents  :  cloth,  $1. 

III.  The    Semicentennial    Celebration    of    Nevada's    Statehood 

(including    Pageant).      Reprint,  of    part    of    Historical 
Papers,  1013-16.     (In  press.)     Jeanne  E.  Wier. 

IV.  Taxation  in  Nevada,  a  History.     Vol.  I  of  Applied  History 

Series.    Romanzo  Adams. 
Carson  City,  1918.    Cloth.  .$1.50. 

V.  Pamphlets.     (25  cents  each.) 

Program  of  the  Pageant  of  Nevada  History.  1914.  Jeanne 
E.  Wier. 

Some  Suggestions  for  Public  School  Celebration  of  Nevada's 
Semicentennial  of  Statehood.  October  31,  1914.  Carson 
City,  24pp.,  1914.  Jeanne  E.  Wier. 

Obligation  of  Nevada  Toward  the  Writing  of  Her  Own  His- 
tory. Reno.  1912.  Dr.  H.  E.  Bolton. 

The  Work  of  the  Western  Historical  Society  as  Illustrated 
by  Nevada.  Reprint  from  Repoi't  of  American  Historical 
Association.  8pp.  Washington.  1912.  Jeanne  E.  Wier. 


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